Europe is home to many thousands of well-established niche software businesses successfully solving customer challenges in markets from finance to healthcare, manufacturing to agriculture.

These businesses have gained significant market share and solid reputations. Due to their customer-centric focus, they enjoy high customer satisfaction and retention as well as an impressive stream of new business via referrals. Employees thrive too, because they share a passion and understand the value they contribute. In return, founders have a strong sense of duty to their employees, who may have spent decades helping to build the business.

After many years at the helm, founders can find themselves leading highly successful businesses they can rightly be proud of. A company whose value is far more than financial, and matters not just to its founder but to customers and employees.

What happens next?

Inevitably, however, there comes a time when a business owner must consider what they want the future to look like.

The trigger for that decision is usually very individual, personal, and not always driven by finances. While valuation is important there are a number of vital non-financial points to consider. The trigger may be the desire to further grow the business or could be due to any number of life events, thinking about succession, or simply a feeling that now is the right time.

Whatever the reason, founders usually want to balance securing a fair financial return and protecting their legacy along with ensuring the company is set up for further success. Making a decision that feels right for them, their goals, and for the business and employees can be difficult. So, understanding all the possibilities is crucial.

Traditional options have drawbacks

It would be natural to think such high-quality businesses would easily attract investment. But they have, until recently, been largely underserved by investment and funding options.

Venture capital is focused on high-growth, earlier-stage companies with large addressable markets. Private equity is generally interested in larger scale businesses that can take on debt. Both have high growth expectations and expect to see returns quickly.

A trade sale to a larger industry player can be a convenient option, but it often comes at the cost of the business’ brand and culture. So much so that the acquired business can be unrecognisable in less than a year. Management buy-outs often prove impossible to arrange.

M&A advisors, accountants and other intermediaries may suggest a management buy-out (MBO) or a merger and acquisition (M&A) with another company. But, securing good valuations in MBOs is hard, while M&As often lead to the acquired business disappearing altogether.

In other words, when it comes to well-established niche software businesses, traditional financial options can feel like hammering a square peg into a round hole. They don’t easily fit, and going down those routes can result in considerable uncertainty for the business’ future.

The long-term choice that’s right for your business 

All of this isn’t to say that these businesses don’t hold immense worth.  Far from it. There just needs to be a better option – one which is more patient and focused on long-term growth.

This is what we’re building at Upliift. A genuinely long-term investment model that aligns with founders’ vision, values, and goals. Supported by a team of true software people from across Europe who understand that Europe is made up of a rich tapestry of business cultures.

The Upliift permanent equity approach promises fair valuations and long-term value orientation. It protects the founder’s legacy and the value of loyal customers, dedicated employees, trusted partners, and the industries these businesses serve.

We are also flexible: we can structure our investments in stages so the founders can take some money off the table while remaining involved in the business and sharing in the upside created through the partnership.

It’s only natural for founders with many years of success behind them to ask themselves what the next chapter might look like.  So, it’s essential to be armed with the right information.

Make the right decisions

Coming soon – the Upliift eBook exploring the choices for founders in more detail and providing practical advice on how to make the right choice for your business.

If you’d like to receive a copy or want to find out more, please get in touch.

About Upliift

Upliift is Europe’s leading quality-orientated permanent equity investor with a focus on niche European software businesses with €1m-€25m in revenue.  Our team of software industry experts across Europe work alongside founders to create better deals for better companies. We collaborate to preserve companies’ brand and culture while making long-term investments that unlock their growth potential and enable founders to fully or partially exit.