- 9 out of 10 Kent entrepreneurs surveyed are optimistic about acquiring a business in the current environment*
- 60% are looking to acquire within the next 12 months*
- 92% recognise the need for a combination of finance sources to fund an acquisition*
For many businesses in the current climate, the top priority is simply survival. However, a recent poll by the Sidcup office of Vantis showed that a surprising number of Kent entrepreneurs are actively pursuing business acquisitions.
The poll was taken at a Vantis seminar at which Nigel Kimber, Director of Vantis Corporate Finance Limited, presented on the topic of ‘Acquiring a Business – Is now the time to buy?’
Nigel’s presentation discussed the following topics: the possible reasons for making an acquisition; whether the current climate provides a suitable opportunity to make that acquisition; and how such an acquisition might be funded, given the current economic state.
Supporting the view that opportunities for growth still exist despite current economic circumstances, Nigel explained that for any acquisition to be worthwhile, it must be integral to the purchaser’s strategic plan for growth and have a defined payback. He emphasised that if there is no logical reason for making the acquisition, then it should not be done.
Where, however, the logic does exist, Nigel advocated, opportunities may well arise in the current climate to acquire a competitor or perhaps an operator in a previously targeted new business sector at a reasonable price. Indeed, he explained, the abundance of financially distressed businesses in today’s market provides an opportunity for acquisitions from administrators or receivers. It is, after all, a buyer’s market – and, with interest rates at the current historical low levels, the finance cost of making an acquisition can be relatively low.
Whilst funding an acquisition is difficult in the current market due to poor liquidity of the banks, many businesses have built up a cash war chest and are now in a stronger bargaining position. For the right business at the right price, Nigel concluded, a mixture of funding from own resources, bank lending and from the target itself could well be the answer to a successful transaction.
Interestingly, the results of our poll* showed that 92% of Kent-based respondents were considering a combination of finance sources, including those mentioned above. With over 90% of the entrepreneurs describing how they feel about the current environment for acquiring a business as: just as optimistic as before the recession, optimistic or very optimistic, the signs are encouraging for businesses in Kent; there’s room to prosper in spite of the credit crunch.
*Poll taken from a sample of 28 attendees representing businesses in the Kent area at a Vantis seminar on 12 March 2009.