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Record Levels of M&A Activity Amongst Young Enterprises

According to the ninth edition of the Barclays Entrepreneurs Index, the number of M&A deals where businesses less than five years old were the target has jumped 28%, from 395 in last year’s report to 505 deals this year. This is also 50% higher than the first report in 2011, when just 335 M&A deals were completed.
 
Indicators of entrepreneurial activity, from starting, growing and exiting a business, are apparently at their strongest levels since 2011. However, while the record level of M&A activity is good news for entrepreneurs, who are experiencing the wealth creation that comes from exiting a business, the research shows opportunities to scale-up businesses are not being taken.
 
The trend to sell-up rather than scale-up may be the result of an uncertain political and economic environment in 2016, says Barclays, which made it difficult for businesses to plan ahead and grow. Under these conditions it is perhaps more appealing for entrepreneurs to take an early exit from their business.
 
With regards to investment, the Index found that the number of companies receiving expansion funding has also declined – but the overall value of this funding has increased by 70% year-on-year from £995m, to reach £1,690m in this year’s research. This may suggest that, although fewer companies are securing investment at the growth stage, those that do are each receiving a greater individual funding boost.
 
“It’s encouraging to see an increase in the number of new companies being created,” commented Head of Barclays Wealth Management, Andy Houston. “Furthermore, the strong uplift in the number of young companies being bought shows that UK start-ups are seen to have real value.”
 

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