Exit options widen for entrepreneurs

Only 16 per cent of entrepreneurial businesses acquired between January 1 and May 31 this year were bought by private equity firms, and just 14 per cent of firms were bought by competitors, the latest Business and Buyer Intelligence (BBI) Barometer reveals.

Instead, the majority (51 per cent) of entrepreneurial businesses sold in the first five months of the year were acquired by “horizontal” buyers, operating in different industries and looking to grow via diversification.

The Business and Buyer Intelligence (BBI) Barometer, compiled by corporate financiers Ford Campbell, recorded a total of 49 company sales worth between £5m and £10m between January 1 and May 31.

The transactions show that manufacturing businesses remain among the highest prized when it comes to entrepreneurial acquisitions.

Twenty-two per cent of all recorded sales involved a manufacturing company, matched by business and professional services, and followed by computer activities businesses at 13 per cent.

“Cash-rich trade buyers are looking to de-risk and achieve growth through diversification by making acquisitions of businesses from different industries or of ones that provide complementary services or product offerings,” says Laura Jordan, head of business and buyer intelligence at Ford Campbell.

This is very positive news for entrepreneurs who may be considering an exit, but until now had only considered competitors or private equity as their likely acquirers.

The BBI Barometer also found that 35 per cent of entrepreneurial businesses were bought by foreign companies in the early part of 2011, with the USA the most active source of acquisitions, followed by EU countries.

“While the exchange rate remains weak and interest rates remain at an all-time low, international buyers will continue to play integral roles in the future of the UK’s entrepreneurial businesses,” Jordan adds.

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