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Venture study predicts 2012 acquisition boom

One in ten SMEs are actively considering acquiring a competitor, according to a new Venture study based on research among 500 SME owners and directors. The transaction surge appears set to begin in 2012, as a quarter of those polled who are planning acquisitions say they will do so within the next six months.

“For those businesses that have weathered the last few years well, the time may well be ripe to look at competitive businesses,” says Steve Websdale, Venture Managing Director South. “ 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.”

Over a quarter (27%) of businesses polled, said they had the resources to acquire a competing business immediately, with each estimating that they own £190k of investible funds. “Business owners are looking at their options, but they don’t always recognize the varied assets they have at their disposal that can be used to structure an acquisition,” says Steve Websdale. “As well as cash reserves, businesses will need to explore and capitalize upon assets they already own to make their acquisitions and steal a march on their competitors.”

However, many potential deals may falter as business owners confess a lack of experience in the acquisition process. Over three quarters (78%) of SME owners and directors polled have never acquired a company before. A third said they have no idea how to engage in an acquisition or merger, while more than a third (35%) said they would not know how to position for an acquisition. “Despite the potential, many SMEs appear to lack the experience required to undertake a smooth acquisition or sale,” says Steve Websdale. “It’s important that those considering acquisitions take the right advice and understand how they can put their assets to the best use.”