Almost half of UK SME leaders have considered buying another company

Recent findings from Marktlink, an independent international M&A advisory firm with a UK base in Manchester, indicate that 47% of SME leaders have contemplated acquiring another business in the past year. Notably, nearly two thirds (64%) of these leaders plan to make a purchase within the next five years.

Compared to the European average of 39%, UK entrepreneurs are more inclined to consider business acquisitions, as revealed in the past 12 months. The Marktlink Monitor surveyed 1,066 SME entrepreneurs across various regions including the UK, Netherlands, Belgium, Denmark, and the Nordics, with 224 UK-based SME respondents.

Despite recent economic challenges such as inflation, interest rate rises, Brexit impacts, and funding shortages, UK businesses remain hopeful. With improving economic conditions and growing opportunities, half (50%) of UK entrepreneurs believe the present is an opportune time for company acquisitions.

Jonny Parkinson, Managing Partner at Marktlink, commented: “SMEs in the UK have faced numerous challenges in recent years. However, the results suggest a shift towards a more positive phase. Businesses that have weathered economic slowdown, inflation, and rising interest rates are seeing potential improvements ahead.

“The latter half of the year has shown more promise than the earlier part, with increasing levels of activity. This upturn is making entrepreneurs optimistic about future conditions.

“High acquisition interest is partly due to business leaders recognizing opportunities to grow market share by consolidating and acquiring well-performing companies. It's widely known that private equity firms have substantial ‘dry powder’ and are keen on businesses that have navigated recent market challenges successfully.”

In light of recent trading difficulties, about a third (31%) of business leaders have contemplated selling their companies in the past year.

UK SME leaders are generally optimistic about the future, with 57% anticipating an improvement in the domestic M&A market over the next year, exceeding the European average expectation of 48%.

Parkinson added: “Many owners, worn down by recent trading challenges or aiming to reduce risk, are considering selling their businesses. The prospect of securing a personal financial future and strengthening the business by selling to a financial or strategic partner is becoming more attractive to many.

“While owners have traditionally been hesitant to sell to industry competitors, the growing interest from international buyers, especially from the US and Europe (who are facing post-Brexit access issues to the UK market), presents an appealing option. This opportunity allows UK shareholders to realise value immediately by selling to entities that understand the business and market, without being direct competitors, and often provide significant growth prospects for the acquired company.”