SME acquisitions set to spike

Capital investment and acquisitions in the SME market are set to peak over the next 12 to 18 months, a business succession consultancy firm has said.

Craig West, chief executive of Succession Plus has told baby boomer business owners considering exit strategies to expect increased activity in small business acquisitions over the coming year as private capital investment spikes.

Mr West said a dramatic increase in mergers and acquisitions, capital raisings and IPOS for Australia’s major corporates is a positive forward-looking indicator signalling increased activity in the SME market in the near future.

The increased activity at a corporate level is significant as the private capital markets (corporate activity, acquisitions, etc with Succession Plus’s typical clients) will generally lag approximately 12 to 18 months behind the ‘big end of town’, according to Mr West.

“Whilst in our sector of the market we have already seen an improvement in activity (partly led by the increased availability of capital), we can expect this increased activity to really peak in approximately 12 months,” Mr West continued.

This area, like nearly all other investment classes, is cyclical and business owners should be doing everything they can to take advantage of this predicted increase in activity, he said.

“Contrary to the doom and gloom associated with the oversupply of baby boomer-owned businesses in the market and the downward force that will apply on prices – this is simply not our experience, but that comment needs to be qualified by saying that good, well-prepared and successful businesses will always sell.”

“Ultimately, the best advice for any business owner at any stage of the business life cycle is to take time and carefully assess all factors in relation to either their business growth or exit objectives. For those seeking to sell, assess all pertinent data and then develop the strategy to sell the enterprise to the right buyer – at the right time – for the best price,” Mr West said.

 

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