Survey reveals UK SME leaders optimistic about 2024 M&A market

Despite a year which has seen a continuation of the slow deal activity that defined much of 2022, a new survey has revealed that SME leaders in the UK are optimistic about the prospects for an improved M&A market in 2024.

M&A advisory firm Marktlink, which has a UK base in Manchester, surveyed 1,066 SME entrepreneurs from the UK, Belgium, Netherlands, Denmark and Nordics. 224 SME owners from the UK were polled for the survey, which demonstrated a greater degree of optimism among UK owners than their peers from Europe.

47 per cent of UK SME entrepreneurs polled said that they had considered acquiring another business over the past year, compared to an average of 39 per cent among European owners. Nearly two-thirds of those UK owners (64 per cent) said they were planning to buy another business over the next five years.

The survey comes following more than 18 months of restricted activity, during which time UK SME owners have had to contend with soaring inflation and interest rates, a lack of funding, high borrowing costs, low consumer confidence, supply chain issues and the ongoing fallout of Brexit and COVID-19.

However, with early signs that the UK economy is beginning to improve, UK SME owners appear optimistic heading into 2024. 50 per cent of UK-based respondents said that they thought now was a good time to buy a business and 57 per cent said they expect the domestic M&A market to improve over the next year, compared to a European average of 48 per cent.

Marktlink Managing Partner Jonny Parkinson said that SMEs that “have navigated through the recent challenges of an economic slowdown […] are now beginning to see some light on the horizon as these factors ease.”

He continued: “Appetite for acquisitions is high partly because business leaders recognise the opportunities to consolidate and acquire companies that have retained good performance to grow market share. It is well reported that private equity houses remain sat on significant volumes of ‘dry powder’ and continue to show a strong interest in companies that have been able to successfully navigate the recent market turbulence.”

Despite the optimism among owners, the undeniable challenges facing SMEs were also reflected in the fact that close to a third (31 per cent) said that they had considered selling their company over the past year in order to secure the future of the business.

Parkinson added: “We are seeing owners who are now considering a sale due to the fatigue caused by the recent trading challenges, or where they recognize the value of de-risking and taking some cash off the table should things not improve as expected. The opportunity to financially secure a personal future and a stronger future for the business through the sale to a financial or strategic partner is increasingly appealing to a lot of owners.”

“Where owners are historically reluctant to consider a sale to a competitor within the industry, the increasing appetite from international buyers, particularly the US and Europe, the latter of which are facing challenges accessing the UK market post-Brexit, offers an attractive proposition to UK shareholders. It allows them to realise value now and sell to someone who understands the business and the market but isn’t a direct competitor and can often offer significant growth opportunities to the acquired company.”


Also read: Study: One in five SME owners planning full or partial sale within two years

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