Almost half of small business owners have considered buying another business in the past year. Of these, nearly two thirds say they are still planning to purchase another company in the next five years.
This expansionist mindset is particularly strong among UK entrepreneurs, given that the European average for this sort of planning is 39 per cent.
The findings come on the back of a survey involving 1,066 SMEs across the UK, Netherlands, Belgium, Denmark, and the Nordics with 224 respondents from UK alone.
Despite the challenges of the past 18 months, which saw them navigate rising inflation, interest rates, the ongoing impact of Brexit and funding shortages, it shows UK businesses remain optimistic.
Researchers suggest that by recognising signs of improvement in economic conditions and increasing availability of growth opportunities, half of our entrepreneurs think now is a good time to buy a company.
It is well reported that private equity houses remain sat on significant volumes of ‘dry powder’ and continue to show a strong interest in companies
Jonny Parkinson, managing partner at Marktlink, the company behind the research, said bosses “have had to navigate a number of hurdles over recent years, but the results reflect that we are beginning to come out on the other side”.
“Resilient businesses that have navigated through the recent challenges of an economic slowdown, inflationary pressures, and higher interest rates, are now beginning to see some light on the horizon as these factors ease.
“The second half of the year has been much stronger than the first and we’re seeing activity levels pick up, meaning that entrepreneurs are rightly feeling optimistic that conditions will improve in the not-so-distant future.
“Appetite for acquisitions is high partly because business leaders recognise the opportunities to consolidate and acquire companies that have retained good performance to grow market share.
“It is well reported that private equity houses remain sat on significant volumes of ‘dry powder’ and continue to show a strong interest in companies that have been able to successfully navigate the recent market turbulence.”
The increasing appetite from international buyers, particularly the US and Europe offers an attractive proposition to UK shareholders
The research also suggested that, against the backdrop of recent trading challenges and in pursuit of a stronger future for the business, almost a third of business leaders have considered selling their company in the past 12 months.
Overall, they are hopeful that 2024 will bring a greater level of opportunity, with 57 per cent expecting that the domestic M&A market will improve in the next 12 months compared to the European average of 48 per cent.
Parkinson added: “The opportunity to financially secure a personal future and a stronger future for the business through the sale to a financial or strategic partner is increasingly appealing to a lot of owners.
“Where owners are historically reluctant to consider a sale to a competitor within the industry, the increasing appetite from international buyers, particularly the US and Europe, the latter of which are facing challenges accessing the UK market post-Brexit, offers an attractive proposition to UK shareholders.
“It allows them to realise value now and sell to someone who understands the business and the market but isn’t a direct competitor and can often offer significant growth opportunities to the acquired company.”
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The findings in detail here