Growth in sight – company acquisitions as accelerators for growth arouse interest
SMEs strongly oriented towards growth are keen to develop their business through company acquisitions. Financing is sought for investments but also – slightly more than before –for working capital.
SMEs see a slightly brighter future, though the positive outlook has not been very strong. Despite the slow trend, the share of strongly growth-oriented enterprises has remained steady, and roughly one SME in ten characterises itself as strongly growth-oriented.
Interest in company acquisitions is reflected in financing needs
One in five SMEs sees company acquisitions as potential accelerators of growth. It is particularly positive to note that nearly one in three strongly growth-oriented enterprises is interested in expanding its business through acquisitions within the next few years. The interest in company acquisitions also impacts on the need for external financing, since about 80 per cent of these enterprises indicated that potential expansion would require financing.
“The survey found that about half of SMEs had no plans for transfer of ownership in the future. On the other hand, 40 per cent said that they will wind up enterprise activities within the next ten years. We want to be there to ensure that sellers start preparing for transactions in good time and companies seeking growth do not miss a deal for lack of financing. There are solutions in place for financing transfers of ownership and company acquisitions,” says CEO Pauli Heikkilä of Finnvera.
Transfers of ownership are also reflected in measures to develop enterprise value. SMEs interested in transfers of ownership and company acquisitions are active in monitoring the value of the enterprise, whereas other enterprises show clearly less interest in this.
No essential change in the availability of financing
The availability of financing is still at a good level, and slightly over one out of five small businesses reported that they had applied for financing from a bank or some other source. Growth-oriented enterprises in particular have maintained a high level of interest in external financing. SMEs intend to apply for financing for various investment needs and also for growth inputs. Underlying the plans to apply for financing are the quickening economic growth, the assumption that growth will continue, and the consequent increase in investment activity. In this respect, the outlook has improved slightly more since the previous barometer survey. On the other hand, expectations are somewhat uncertain, as indicated by the slightly greater share of enterprises that plan to apply for financing and use it for working capital.
The Federation of Finnish Enterprises, Finnvera and the Ministry of Economic Affairs and Employment jointly conduct an SME Barometer Survey twice a year, the purpose being to study the operations and economic environment of small and medium-sized enterprises. The barometer for spring 2017 is based on responses given by about 4,800 SMEs.
Additional information:
Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400
Jonna Myllykangas, Information Officer, tel. +358 29 460 2740
