Why US Searchers Should Buy UK Businesses | The 3.3x vs 7x Arbitrage
UK SMEs at search-fund size trade at 3.3x EBITDA. The Stanford median is 7x. The same business is 53% cheaper across the Atlantic. Here's the math, by sector.
UK SMEs at search-fund size trade at 3.3x EBITDA. The Stanford median is 7x. The same business is 53% cheaper across the Atlantic. Here's the math, by sector.
A US searcher entering the market in 2026 faces a problem that didn't exist five years ago: too many buyers chasing the same Main Street pipeline. Stanford recorded 94 new search funds in 2023, a record. Private equity has moved aggressively below $5M enterprise value. SBA-financed buyers, Codie Sanchez–trained operators and traditional searchers are all bidding on the same $2.2M EBITDA businesses at 7x multiples. Now look across the Atlantic. The same business in the UK trades at 3.3x. The data to find it is free. The succession pressure is structural. The sterling discount adds another 10–15% on top. The friction — visa and tax — is real but routine. This article makes the case with numbers, not assertions.
The 2024 Stanford Search Fund Study, which tracks 681 search funds formed in the US and Canada since 1984, reports a median EBITDA multiple of 7.0x for search-fund acquisitions in 2022–2023. Median purchase price: $14.4M. Median EBITDA at acquisition: $2.2M. Median EBITDA margin: 27%.
The Dealsuite UK&I M&A Monitor for H1 2025, which surveyed 433 UK and Ireland mid-market advisory firms, reports an average EBITDA multiple of 5.3x across the whole UK&I mid-market. The granular detail matters more than the headline. Dealsuite's pan-European Monitor breaks the data down by EBITDA size band. At €200,000 of normalised EBITDA — the heart of the small-end search target zone — UK and Ireland businesses trade at 3.1x. At €10M EBITDA they reach 8.5x. The 5.4x spread between small and large is the widest in Europe.
That small-firm discount isn't an anomaly. It's the structural feature of the market.
For the US comparison, the 2025 CLFI buyer-type analysis put US private equity at around 12.8x EBITDA at the institutional level, with US corporates at 9.9x. Those figures aren't comparable to UK SME deals — they describe a different market segment — but the directional point holds across every credible sample. First Page Sage's 2025 report on US small businesses ($250k–$3M EBITDA) puts average multiples meaningfully above UK comparables in nearly every sector.
The cleanest like-for-like is Stanford's 7.0x median against UK&I's 3.1x at €200k EBITDA, or 3.3–4.0x at the £200k–£500k EBITDA band where small-end searchers actually transact. The same earnings stream is worth less than half in the UK.
Take a representative UK SME target: a B2B services business with £750,000 of EBITDA, an established 15-year client base, a sole owner aged 64, and £1.2M of net assets on the balance sheet. Market data for this profile puts the median multiple at around 4.5x EBITDA.
Headline enterprise value: £3.375M. At GBP/USD 1.35, that's roughly $4.55M in dollar terms.
The same business in the US — same EBITDA, same margin profile, same sector, same owner age — would transact at the Stanford 7.0x median. Enterprise value: $5.25M.
The dollar buyer pays $4.55M for the UK version and $5.25M for the US equivalent. That's a 13% nominal discount on a like-for-like basis, before considering anything else. Move up to a £1.5M EBITDA target, where UK precision engineering trades at 5.0x and US comparables run closer to 7.5x: UK enterprise value £7.5M (~$10.1M) versus US enterprise value $11.25M. The discount widens to 10% at the headline and grows further once leverage is layered in.
Now add the sterling effect. Over the past 12 months GBP/USD has traded between 1.30 and 1.39, averaging 1.34. A US searcher converting acquisition capital from dollars to sterling at 1.35 captures the full headline benefit. A US searcher who funded their search capital at a rate of 1.30 and acquires when sterling is at 1.40 takes a real FX gain on top of the multiple discount. Neither is a guarantee, but the structural pattern — sterling weak versus the dollar over the post-2016 decade — has been remarkably persistent.
The UK SME market is poorly served by its own buyers. Three structural reasons:
UK private equity is concentrated above £10M enterprise value. PE deal-makers in London are paid on fund deployment, not deal count. A £3M ticket size barely moves the needle for a £500M fund. Below £10M EV, the buyer pool thins dramatically.
UK trade buyers are cautious and slow. UK corporates approach M&A with greater scepticism than US peers — a function of post-2008 regulatory caution, post-Brexit uncertainty and a domestic equity culture that has always been less acquisitive than the US.
UK business brokers complete only around 20% of mandates. That figure is generous because it includes mid-cap deals where success rates are higher. At the small-firm end, broker-listed completion rates are well below 20%. Most viable sellers never reach the open market because the broker industry isn't structured to serve them.
The result: thousands of viable sellers with no qualified buyer. That is exactly the condition that creates arbitrage for an outside operator with capital and discipline.
Three reasons the discount is persistent rather than cyclical.
The buyer pool isn't growing. UK PE is structurally allocated above £10M. The UK doesn't have a domestic search-fund equivalent at meaningful scale — IESE tracks 25 to 35 international search-fund acquisitions per year across all of Europe combined, against Stanford's 29 acquisitions per year in the US and Canada alone. The supply of UK targets is rising as the demographic exit wave intensifies. Demand isn't.
Sterling has been structurally weaker against the dollar since 2016. GBP/USD averaged 1.55 in the decade before Brexit. It has averaged 1.27 in the decade since. There's no obvious catalyst for a return to the pre-2016 norm.
The data infrastructure is one-way. A US searcher has access to the full UK Companies House dataset for free. A UK searcher trying to buy a Delaware corporation gets nothing. The information asymmetry runs in favour of the cross-border US buyer.
The single biggest reason to consider the UK is one most US searchers don't appreciate until they've actually run searches in both markets. Every active UK limited company files at least the following with the public register, free of charge:
Full director details — name, month and year of birth, appointment date, current and former directorships. Annual accounts — balance sheet at minimum for small companies, full statutory accounts for medium and larger entities. Confirmation statement — listing all persons with significant control (PSCs), shareholdings and voting rights. Charges register — every secured loan, every floating charge, every debenture. Filing history — late filings, methodology changes, restatements, every dissolution attempt.
All of it is machine-readable through the bulk data API. The complete dataset of 3.6 million active companies is downloadable as a single file. Director-level data goes back decades. Accounts data filed in iXBRL format is fully parseable.
There is no equivalent in the US. Delaware, the most popular US incorporation state, does not publish director names. Most US states require essentially nothing beyond a registered agent. Owner-operated businesses are functionally invisible until they hire a broker or list on a platform. US searchers spend the bulk of their search-phase budget paying for proprietary databases, broker relationships and outbound prospecting — much of it duplicating what Companies House gives away free.
The 2024 Stanford study reports that median search capital reached $500k for the first time, with the median search lasting 20 months. A meaningful share of that budget pays for data access, list-building, broker outreach and CRM tooling — work that Companies House performs for the UK market at zero marginal cost. A US searcher with a UK thesis can redirect that budget to relocation, legal structuring and travel. The dollar value of the data subsidy is hard to pin down precisely, but the directional saving is significant: tens of thousands of dollars on data alone, plus weeks of compressed timeline.
For context on US deal-sourcing economics, the average US searcher contacts more than 3,000 companies to make one acquisition. We broke down the full funnel — outreach to LOI to close — in our search fund deal sourcing analysis. The UK pipeline density flips the funnel ratio at the top, because more pre-qualified targets are visible from day one.
We analysed the entire active UK company register to map where the search-fund opportunity actually sits.
| Population segment | Count |
|---|---|
| Active UK companies with director and financial data | 3,624,135 |
| Single-director companies | 2,088,217 |
| Companies with average director age 60+ | 834,644 |
| Single-director companies, director 60+ | 455,211 |
| Single-director companies, director 70+ | 118,721 |
| Sole director, 15+ years tenure | 296,327 |
| Sole director 60+, £50k+ total assets, no internal successor | 172,547 |
| PURSUE-grade — strong business + strong exit signals (the addressable pipeline) | 8,400 |
The single-director figure deserves attention. McKinsey's *Great Ownership Transfer* report describes US succession failure as a behavioural problem — owners who don't plan ahead. In the UK, it's structural. Nearly two-thirds of companies have no internal successor because there's nobody else in the building with legal authority. When that single director ages out, the only options are sell or dissolve.
Companies House recorded 726,735 dissolutions in financial year 2025 — up 9.6% on the prior year, the highest figure on record. Average dissolved-company age: 4.5 years. The vast majority were viable businesses that simply had nobody to take over. The pipeline of forced succession events is intensifying, not slowing.
For a US-based searcher, this matters specifically because the pre-approach signal is fully visible. Tighten the filter to sole directors over 60 with at least £50k in total assets and no internal successor: 172,547 companies, £243.2 billion in balance-sheet assets. None listed for sale. None with a broker. None that any other US searcher is currently looking at.
The most defensible single number we publish is this: 8,400 UK companies are PURSUE-grade — a strong business meeting strong exit signals.
PURSUE on the ExitRadar model means the intersection of two lenses: a business that clears the quality gate (reasonable financial health — positive net assets, sustained filings, no insolvency flags) AND shows strong exit-timing signals (director age, single-director risk, sole-officer history), in a sector with active acquirer demand.
This is the genuinely addressable pipeline. Established, asset-backed, owner-operated businesses with visible succession pressure and no buyer in sight. Almost none have a broker. Most have never had an unsolicited acquisition approach. A US-based searcher can filter this dataset by sector, region, score band and director age in minutes.
The 8,400-company PURSUE pipeline isn't evenly distributed. Five sectors concentrate the strongest combination of multiple discount, succession pressure and pipeline density.
Electrical contracting, mechanical services, plumbing and heating, civil engineering, demolition and groundworks. Median UK multiples for these trades sit at 3–5.5x EBITDA. US comparables typically transact at 4–7x.
Why the gap is widest here: UK specialised construction is intensely fragmented, owner-operated, and concentrated in age cohorts that were trained pre-1990. Director-age data shows a particularly heavy 60+ skew. The work itself is non-cyclical at the small end (residential and commercial maintenance demand is structural) and the relationships are local. A US searcher targeting a regional buy-and-build platform in UK electrical contracting can typically build a £3–5M EBITDA platform across three to five tuck-ins at multiples that simply aren't available in the US.
Owner-operated consulting practices with established client bases, often founded in the early 2000s. Multiples sit at 5–8x for established firms, with quality premiums for recurring revenue, contracted services and concentration in growth-segment clients (tech, financial services, regulated sectors).
The Dealsuite H1 2025 data shows UK&I Business Services trading at multiples around 6.0x — meaningfully above the 3.3x small-firm floor — but still well below the 7–9x range typical for US business-services search-fund deals. The gap shrinks as you move up the quality curve, but the pipeline density at the £500k–£2M EBITDA band is significantly higher in the UK.
Care homes, dental practices, veterinary, allied health. Subject to CQC and other regulatory regimes that US searchers underestimate, but pricing power is strong, exit demand from PE-backed roll-ups is consistent, and the demographic tailwind (UK over-65 population growing 1.5% annually) is structural. UK&I Healthcare and Pharmaceuticals trades at 7.6x in the Dealsuite data — the highest sector multiple after software — but small independent practices and homes still transact at 4–6x, particularly outside major metro areas.
A US searcher with a healthcare-services background can target consolidation plays in regional dental, optometry and veterinary chains where the regulatory complexity is the moat that keeps PE roll-ups from cherry-picking the entire market.
Particularly the West Midlands and Cambridgeshire clusters. UK precision engineering trades at 4.5–6.5x EBITDA. The same kind of business in Ohio or Pennsylvania trades closer to 5.5–8x.
This sector punches above its weight in our exit-readiness data because the founder cohort is heavily weighted to 1980s and 1990s incorporations. Engineers who founded businesses at 35 are now 65–75. Internal succession is rare — children typically don't enter the family engineering business at the rate they once did. Trade buyers exist but are slow. The combination produces a deep pipeline of viable, asset-backed manufacturers with motivated sellers.
Property management, lettings agencies, surveyors. Highly fragmented, owner-operated and chronically under-marketed. Multiples sit at 4–6x for established firms with recurring revenue. Pipeline density is high because barriers to entry are low and the founder cohort is heavily over-50.
The highest concentrations of high-scoring exit-ready companies cluster outside London. Essex, Kent, Surrey, Hampshire and the West Midlands dominate by absolute count. The pattern reflects a generation of business builders who left London after the 1980s, established companies in commuter and industrial regions, and built them over 25–35 years. Those owners are now ageing out.
For a US-based searcher, the practical implication is that none of these sectors require relocating to a major financial centre. London is not the deal flow. Reading, Maidstone, Solihull and Cambridge are. House prices are 50–60% lower than London. Operating costs are lower. Quality of life is generally higher. The ETA pattern of acquiring in a smaller commuter market and operating from there mirrors what works in the US — except the businesses are 30–50% cheaper.
The arbitrage isn't free. Three frictions need to be solved. None are absolute. All are routinely navigated by experienced cross-border operators. The honest answer is that they add roughly six months and £15,000–£40,000 of professional fees to a transaction. They don't change the underlying math.
A US citizen cannot legally operate a UK business they own without an appropriate visa, unless they hold dual UK or Irish nationality. Since the closure of the Tier 1 (Entrepreneur) and Tier 1 (Investor) routes, the realistic options are:
Self-Sponsorship via the Skilled Worker route. Set up a UK Ltd, obtain a sponsor licence, then sponsor yourself as a Skilled Worker in a CEO or director role. Five years to indefinite leave to remain. Cost typically £3,500–£5,000 in fees on top of the acquisition itself. This is the standard path for international ETA operators. It works because the acquired business can serve as the sponsoring entity once the deal closes — but structural sequencing matters and benefits from specialist advice.
Innovator Founder visa. Designed for genuinely novel businesses with endorsement from an approved body. Wrong fit for traditional ETA acquisitions of established businesses, but occasionally relevant for buy-and-build platforms with a clear innovation thesis.
Standard Visitor visa (with ETA from 25 February 2026). Sufficient for site visits, management meetings, deal negotiation and signing — up to six months per visit. Not sufficient for actually running the business.
Passive ownership with a UK-resident operator. A US searcher who doesn't want to relocate can structure an acquisition as a passive ownership stake with a UK-based operating partner running the business day-to-day. Genuinely viable for buy-and-hold theses but creates principal-agent dynamics that need careful structuring upfront.
The Self-Sponsorship route is the standard path for hands-on operators. Total time to operating residency: typically 4–6 months from first solicitor engagement to visa issuance. This adds time but doesn't kill the deal.
This is the friction US searchers underestimate most often, and the one that catches people out late in a deal.
A US citizen who owns 10% or more of a UK Ltd faces obligations under the US Internal Revenue Code that don't apply to UK-resident owners.
Form 5471 must be filed annually with the IRS for any US person owning 10%+ of a foreign corporation. Penalties for non-filing start at $10,000 per year per company. This is paperwork, not a tax bill, but it is non-optional.
GILTI (Global Intangible Low-Taxed Income) taxes the profits of a Controlled Foreign Corporation owned by US persons even if those profits are not distributed. A single-member UK Ltd is almost always a CFC. The effective US tax rate on GILTI income depends on individual versus corporate ownership and whether you elect Section 962 treatment.
Subpart F taxes certain types of passive or related-party income from a CFC immediately, regardless of distribution.
The structural fix most US-side advisors recommend is the UK LLP rather than a UK Ltd, particularly when there is more than one US member or a mix of US and UK members. A UK LLP with two or more members can be treated as a flow-through entity for US tax purposes — meaning profits are taxed once on the partner's US return and the GILTI/Subpart F machinery does not engage.
The entity choice has to be made before the deal closes. Restructuring afterwards is possible but expensive and tax-inefficient. Cross-border tax counsel typically charges $15,000–$30,000 for the full structuring exercise on a single acquisition, more for buy-and-build platforms. That's one to two report unlocks per percentage point of multiple discount you're capturing — on a £3M deal it pays back many times over.
Running a small business remotely from another time zone is hard. The five-hour US-Eastern-to-UK gap is workable — most of the working day overlaps — but founder-led SMEs require physical presence in the early integration period.
The patterns that work in practice:
Relocate for the first 12–18 months, then move to a part-time supervisory model with a strong UK-based number two. Most successful cross-border ETA operators we see follow this pattern.
Acquire in matched pairs — a US-based investor with a UK-based operator, with the investor handling capital strategy and the operator running day-to-day execution. Common for institutional search-fund vehicles targeting cross-border deals.
Buy-and-build platforms with a UK-resident managing director. Particularly viable for sectors where the searcher's strategic value is M&A capability rather than operating expertise.
What doesn't work: trying to run an owner-operated UK SME from Austin on weekly Zoom calls. The seller has not done that, and the staff you're inheriting will not accept it.
Adding up the realistic friction:
Total professional fees: roughly £30,000–£60,000 ($40,000–$80,000) above what a domestic UK searcher would pay.
On a £4M enterprise-value deal, that's 1–2% of transaction value. Set against a multiple discount that is reliably 30–50% of US comparables, the friction cost is rounding error.
The arbitrage isn't permanent. Three forces are slowly closing the gap.
More international searchers are noticing. IESE and INSEAD ETA programmes are training operators specifically for European deals. INSEAD's 2026 ETA conference takes place in Fontainebleau in May. The international search-fund cohort tracked by IESE has roughly tripled over the past decade. Most of that growth is European searchers, but the share of US-trained operators specifically targeting UK acquisitions is rising.
UK PE is moving down-market slowly. Lower-mid-market UK PE funds are starting to write tickets at the £5–10M EV level. As fund sizes compress and dry powder pressure builds, the £3–5M segment will see more competitive bidding within the next three to five years.
Search-fund-friendly UK debt is becoming available. UK challenger banks (HSBC Innovation Banking, Allica, OakNorth) are increasingly comfortable funding ETA acquisitions in the £1M–£10M EV range with structures that mirror US SBA debt. As leverage availability improves, more UK-based searchers will enter the market.
None of these trends is fast. The gap that exists today is likely to persist for the next five years, narrow over the following five, and look very different by 2036. A US searcher acting in 2026–2028 captures the widest version of the discount.
The forcing function on the supply side is the demographic curve. The UK has 998,529 active companies whose directors are currently in the 50–60 age bracket — they will age into the 60+ cohort over the next decade. Behind them sit another 981,863 in the 40–50 bracket. The pipeline of structural succession events extends decades into the future. Supply is rising. Demand is rising more slowly. The arbitrage gets sharper before it narrows.
If the math works for you, the operational sequence is straightforward.
1. Resolve the immigration question first. Talk to a UK-based immigration solicitor familiar with the Self-Sponsorship route, ideally one with experience in ETA and search-fund deals. The answer determines everything downstream.
2. Engage a cross-border tax adviser. Specifically one fluent in both UK corporate tax and US Form 5471 / GILTI / Section 962 treatment. The entity choice (UK Ltd versus UK LLP) needs to be made before signing.
3. Run your first searches in Companies House data directly. Build conviction that the dataset is real, complete and useful. Use ExitRadar or another data layer to filter — but verify against the underlying public register so you understand what you're working with.
4. Pick a sector and a region. Don't run a generalist search. The arbitrage is in specific fragmented sectors with clear succession pressure: specialised construction, B2B services, healthcare services, precision manufacturing and real estate services are where the data shows the strongest concentration of viable, unrepresented targets. Concentrate geographically — Essex, Kent, Surrey, Hampshire or the West Midlands — to make site visits tractable from a single base.
5. Plan for 18 months minimum. Cross-border ETA adds friction at every stage. The deals exist. The friction is real. Both can be planned around if you start with realistic expectations.
ExitRadar identifies UK businesses showing succession and exit signals using public Companies House data. Every active UK company in our database is scored against an exit-readiness model that combines director age and tenure, single-director risk, financial health, sector context and twelve other signals. Each unlocked report includes:
Full director profile with tenure history. Estimated revenue and EBITDA, with confidence ranges and method provenance. Indicative valuation range based on sector multiples adjusted for quality and earnings volatility. Recommended acquisition approach — channel, timing, opening narrative and deal-structure signals. Risk and diligence flags specific to the company and sector. Group-structure detection (parent and subsidiary relationships) so a US-based searcher doesn't approach the wrong entity. A draft approach letter calibrated to the owner profile.
The practical workflow: filter by sector, region, score band and director age in the public dataset; unlock targeted reports; approach selectively. Start with three free reports, then move to a Starter Pack for project work or the Searcher Plan for sustained monthly volume.
The permanently free sample report shows exactly what an unlocked report looks like before a US searcher commits anything.
The platform is sector- and geography-agnostic on the buyer side. Whether you're searching from Boston or Bristol, the data is the same. Reports are generated on-demand from live Companies House data, so a US-based searcher running searches at 9am Eastern is looking at the same dataset a UK-based broker is looking at three hours later.
The Stanford 2024 median search-fund acquisition costs $14.4M. The same EBITDA stream in the UK, at the small-firm multiple, costs around $7M in dollar terms. The same business is roughly half the price across the Atlantic, with cleaner data, denser pipeline and weaker buyer competition.
The friction is real. The friction is also rounding error against the discount.
For a US searcher entering the market in 2026, the question isn't whether the UK arbitrage is real. The data is unambiguous on that. The question is whether you're willing to spend six extra months on visa and tax structuring to capture multiple compression that, over a five-year hold, is worth millions of dollars in entry-price savings alone — before any operational improvement, before any exit-multiple expansion, before any FX gain.
For a meaningful subset of US searchers, that's an obvious yes.
*This analysis is based on ExitRadar's database of 3,624,135 active UK companies derived from public Companies House filings. Multiples cited are drawn from Dealsuite's H1 2025 UK&I and European M&A Monitors, MarktoMarket's UK M&A Valuation Indices H1 2025, and CLFI's 2025 buyer-type analysis. US comparables are drawn from the 2024 Stanford Search Fund Study (median 7.0x EBITDA, $14.4M purchase price, $2.2M EBITDA, 27% margin, 681 search funds tracked since 1984) and First Page Sage's 2025 small business EBITDA multiples report. International search-fund data drawn from IESE's 2024 International Search Funds study. GBP/USD reference rate of 1.35 as of late April 2026. Visa and tax framing is general guidance only — every cross-border deal needs specialist advice from qualified UK immigration and US international tax practitioners.*
About ExitRadar: ExitRadar identifies UK businesses showing succession and exit signals using public Companies House data. Reports provide pre-approach intelligence for search fund operators, ETA practitioners and business brokers in the UK, US and Europe. Browse the database and unlock reports at exitradar.co.uk.