Exitround, a service that matches buyers and sellers of startups and small businesses, is partnering with private equity firms in a new program called Exitround Capital. The service will target companies in retail, health care, financial services and other industries with up to $100 million in revenue.
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Launched last year, Exitround has developed a platform where more than 1,200 buy-side companies and 850 sell-side companies convene to scope out potential acquisitions. This move expands Exitround beyond its core business, which has been predominantly focused on early-stage tech startups
Taking advantage of changed regulations, Exitround is able to facilitate these transactions without bankers. Typically, these deals are facilitated by boutique investment banks, but Exitround’s platform effectively takes out the middlemen, and can result in reduced fees.
“The efficiency created between highly-relevant connections of buyers and sellers has the opportunity to accelerate overall M&A cycles,” says CEO Jacob Mullins. Deals were previously “limited by human connection for over 100 years.”
While Exitround just facilitates acquisitions, Mullins notes that other types of transactions can come about. “Once we make the introduction for M&A purposes, we step out of the equation and in some cases, investment does result.”
One investor who is hoping to take advantage of Exitround’s channel is Mark Callaghan, managing director at Andlinger and Company. Callaghan says that the service is “going to open up some opportunities that I otherwise would have a very difficult time finding through traditional channels.”
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Chris Langone, vice president at Symphony Technology Group, says that he sees potential in finding middle market private equity deals with Exitround’s platform because “the ability to do go through a lot of deals in a short amount of time is pretty interesting.”
But don’t expect Exitround to replace bankers anytime soon. Callaghan does not see Exitround as direct competition to investment bankers stating that he expects to find opportunities that are “ under the radar screen of a typical intermediary.”
Langone says that bankers will continue to stay relevant for larger M&A transactions. “For bigger and bigger deals, it’s almost inevitable that they will show up because they add value.”