The transaction increase looks set to start in 2012 as appetite returns, with a quarter of those planning acquisitions in the next six months.
But deals may be stymied as business owners admit to a lack of experience in the acquisition process.
Steve Websdale, MD South at Venture Finance, who commissioned the survey said: “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.”
The study is based on research amongst 500 SME business owners and directors.
The appetite for acquisition looks set to increase quickly as SMEs explore their options. Over a quarter of those hoping to acquire a business plan to do so in a year or less. the research finds.
Over a quarter also said they had the resources to acquire a competitor’s business now. These businesses estimate they are sitting on an average of £190,000 each of investable funds.
Steve Websdale, comments: “Business owners are looking at opportunities as they arise, but they don’t always recognise the varied assets they have at their disposal and how they can be used to structure an acquisition.
“As well as their cash reserves, businesses will need to explore and capitalise upon assets they already own to finance their acquisitions. By using existing assets they can steal a march on their competitors.”
First time buyers
However there is a distinct lack of past experience amongst SMEs, with potential to create deal-making difficulties, the research uncovers.
Over three quarters (78%) of SMEs have never acquired a company before. As a result, many lack the knowledge of the financial or operational side of carrying out an acquisition or business sale.
A third of SMEs said they have no idea of how to engage in an acquisition or merger. More than a third said they would not know how to position for an acquisition.