Acquisitions of UK and Irish SMEs climb nearly 60 per cent

Interest in acquiring UK and Irish SMEs peaked in the first half of this year as buyout firms and large companies seek to capitalise on undervalued high-growth businesses, according to research released today.

Data from Dealsuite shows the number of small and medium businesses with revenue between £1m and £200m sold in the UK and Ireland surged 59 per cent in the first six months of this year compared to the same period in 2020.

Weak valuations in UK and Irish markets have attracted the interest of private equity firms and larger companies seeking to diversify their business lines and generate new income streams.

On average, UK and Irish SMEs were sold for 5.5 times their gross profit. The research surveyed 318 M&A advisory firms.

M&A activity differed sharply between sectors, with the share of companies in the hospitality and tourism sector plunging 60 per cent.

Acquisitions rose in the industrial and manufacturing and construction and engineering sectors, while media and communications businesses saw one of the lowest amount of mergers.

The data comes as interest in buying UK businesses, especially listed companies, is intensifying due to their relatively lower valuations compared to EU and US firms.

Supermarket chain Morrisons is currently the subject of a £7bn takeover bid by Clayton, Dubilier and Rice, while British defence technology firm Meggitt has been in the teeth of a bidding war between two rival US companies.