SMEs lack experience for deals

Over a third of UK small and medium-sized businesses (SMEs) lack the relevant experience for M&A, new findings reveal.


Over a third of UK small and medium-sized businesses (SMEs) lack the relevant experience for M&A, new findings reveal.

Over a third of UK small and medium-sized businesses (SMEs) lack the relevant experience for M&A, new findings reveal.

Research from asset-based lenders Venture Finance shows that in a survey of 500 SME business owners and directors, one in ten are actively considering purchasing a competing company. However 35 per cent say they have no idea how to engage in a company acquisition.

Of those saying that they are looking to make acquisitions, 29 per cent are planning to do so in a year or less.

Steve Websdale, managing director of the South for Venture Finance, comments: ‘For those businesses that have weathered the last few years well, the time may well be ripe to reap the rewards now with competitive acquisitions.

‘But many of these ‘first-time buyers’ will need a helping hand to make sure they take the best financial and structural approach to strategic acquisition.’

Of those questioned 36 per cent say they would not know how to structure the financial side of an acquisition, with 61 per cent admitting they would need external advice when looking to acquire a business.

However 27 per cent revealed that they had resources to acquire a competitor’s business now.

Websdale adds: ‘Despite the potential, many SMEs appear to lack the experience required to undertake a smooth acquisition or sale. This could lead to poorly structured deals and financial headaches for first time buyers.’

Advice is important, Websdale says, with financial headroom needing to be found to prevent a loss of liquidity in the ‘crucial’ post-acquisition phase.

Todd Cardy

Todd Cardy

Todd was Editor of GrowthBusiness.co.uk between 2010 and 2011 as well as being responsible for publishing our digital and printed magazines focusing on private equity and venture capital.

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