Increased investor interest in the mid-market space is leading to many business owners feeling under pressure to sell rather than upscale their companies, according to research by law firm Mills & Reeve.
The poll of 500 mid-market business leaders across the UK suggests more than half (55%) have in recent times seen an increase in investor interest.
On the surface of it this is good news for mid-markets owners, however it is mitigated by the fact it has led to 29% feeling under pressure to sell their business.
Almost two-fifths (39%) of those polled said they feared “missing the boat” if they don’t sell now the economy is in a relatively strong position. But 34% are worried that if they do sell now they risk not realising the full potential of their business.
This is against the backdrop of a shift towards selling rather than growing businesses. One-third of mid-market companies are set up for a sale – with half of those expected to be sold within two years.
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This tallies with the view – held of 44% of respondents – that it has “never been harder to grow a business” in the UK. A similar number (40%) see selling as a less risky approach than scaling up.
Any sign of a downturn in the economy would see almost half (48%) of business owners switch their strategy from “growth” to “survival”, according to the research.
That could turn out to be a self-fulfilling prophecy, as 69% of mid-market owners believe the trend of selling rather than growing businesses is damaging to the UK economy.
Mills & Reeve partner Claire Clarke said that although the mid-market currently accounts for one-quarter of the UK’s turnover, it is “capable of delivering even more growth and jobs”.
“From its ranks will emerge Britain’s next generation of world-leading large enterprises,” she said.
“While selling may be the right choice for some companies, scaling up can, with the right support, offer greater returns for business owners, shareholders and the UK economy as a whole.”
Further reading on growth: Pitch to rich – fuel business growth through marketing