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  • Andrew Hill FCA

Why you’re Never too Small for Acquisitions



My company is too small to acquire another business, right? Well, not so fast.

Many people assume that M&A is only for multi-nationals with huge war chests.

But the SME sector is one of the most exciting, dynamic segments for M&A activity and is where huge value creation takes place. Thousands of great deals get done every year.

There are a few good reasons for this:

1. The SME space is beautifully fragmented. At any one time there are thousands of owner-managed businesses where people are retiring, or whose circumstances have changed. Small businesses come up for sale all the time, and sharp companies are buying them.

2. Finance is readily available (yes, even now). If your current business, or that of the target, is profitable or has a good asset base, financing can be straightforward. And provided you keep the target separate from your current business (i.e. a different legal entity without cross guarantees) the risk of the unknown can usually be managed.

3. Buyer/Seller rapport gets deals done. At SME level, self-made entrepreneurs tend to negotiate directly. They are pragmatic, flexible businesspeople who get things done. Deals therefore complete more readily; certainly when compared to those multi-nationals with their endless layers of sign-off by middle managers.

4. Small deals give better results

We sometimes assume that M&A is about bagging the blockbuster deal of a lifetime. Veteran acquirers know otherwise. Several small, low stress acquisitions over time spreads the pressure and allows for continuous learning, as this brilliant McKinsey article explains.



In summary, there is a whole world of M&A activity every year that never grabs the headlines – all quietly undertaken by well-informed small private trade buyers.

Understandably, most SME business owners have their heads down right now. But for those with ambition and vision, this year will herald another opportunity to grow quickly and smartly through an SME acquisition.

Think you must be too small for M&A? Think again.

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New Path Advisory Ltd.

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New Path Advisory Ltd.  Registered in England and Wales No 11264732. Director:  Andrew Hill, FCA