Two-thirds of companies (66 per cent) with an annual turnover of at least £10 million believe they are adequately geared or even under-geared, according to research from Investec Private Bank. By contrast, only 14 per cent of companies admit they are uncomfortable with their level of debt.

Private equity-backed businesses showed a lower level of confidence in their degree of gearing, with just under half (49 per cent) unconcerned about their borrowing.

The survey’s outlook for mergers and acquisitions (M&A) is less gloomy than some analysts have predicted, with over a third of companies (37 per cent) saying they are ‘likely’ or ‘very likely’ to acquire another business over the next 12 to 24 months. Seventy-six per cent of those that are ‘likely’ and 96 per cent of those ‘very likely’ to make acquisitions rate their balance sheets as either adequately or under-geared.

John Clifford, director at Investec, comments: ‘UK businesses, whether private equity-backed or not, appear to have robust capital structures that are not over-geared, giving them the appetite and ability to make further acquisitions.’

Clifford adds that according to Investec’s experience over the past few months, mid-market M&A activity has remained strong. He concludes: ‘This activity has predominantly been driven by the higher-quality private equity and corporate acquirers who are still buying attractive assets, although this has been offset by a reduction in the quantity of more marginal deals.’