More than a third of private British businesses plan to expand by making an acquisition this year, research finds.
More than a third of private British businesses plan to expand by making an acquisition this year, research finds.
The International Business Report, commissioned by accountancy firm Grant Thornton, finds there has been a jump in the number of businesses looking to acquire compared with other growth strategies in the past year. The report finds 36 per cent plan to make a purchase, up from 26 per cent last year.
The primary reason to embark on a merger or acquisition is to build scale (61 per cent) and gain access to new markets (61 per cent), the survey finds. Acquiring new technology or established brands (41 per cent) and gaining access to lower-cost operations (40 per cent) are other factors companies consider.
When looking to make a merger or acquisition, the research finds that 85 per cent expect to make domestic acquisitions, compared with 29 per cent planning to acquire overseas businesses.
Mike Hughes, corporate finance director at Grant Thornton UK, comments that the increased interest in M&A activity will lead to higher valuations because of the intensified competition for high-quality companies.
Hughes comments, ‘Over the last 12 months there has been a significant improvement in the interest, appetite and financial capability of trade buyers to do deals. We have seen evidence of high quality businesses attracting premium prices. In particular fast-growing online retail businesses have attracted impressive takeover offers in recent months.’
The International Business Report is an international survey of the opinions of privately held businesses. It questioned 349 British companies last year.
