Business growth ambitions and management buy-outs (MBOs) are the main drivers behind business acquisition funding, according to a new survey by leading SME funding provider Asset Advantage.
When asked to identify the main drivers of business acquisitions, more than half (53%) of commercial finance brokers said that clients looking to expand their current businesses was the primary motive. Meanwhile, one-in-four brokers picked MBOs, where existing management teams look to buy the business they work for or buy out a business partner.
Just over a quarter (27%) of respondents said management buy-ins are a key driver behind transactions, where a new management team looks to take over an existing business. Slightly less (25%) said business mergers or funding to buy out a competitor – combining businesses and reducing competition.
Brokers were questioned as part of the latest survey by Asset Advantage, a leading independent provider of business finance to UK SMEs. It questions commercial finance brokers on a range of topics to assess current lender appetite, activity and demand, as well as their views on the economy and wider market.
In addition to asset finance, Asset Advantage has been offering business loans of up to £1 million for more than a decade. Funding options start at £75,000 and are often used to fund business acquisitions, MBOs and MBIs, with Asset Advantage always looking to fund the full loan amount.
The findings come as Asset Advantage is set to host a business acquisition webinar for commercial brokers, covering the process of gaining funding for a business acquisition. The interactive session will explore how best to support clients when buying a business, buying out a business partner or completing a management buy-in. It takes place on Wednesday 5th November, between 11:00-12:00 with brokers encouraged to register their place on the Asset Advantage website.
Gary Thompson, sales director at Asset Advantage, said: “Even in the current climate, UK SMEs are not only showing real resilience, but a clear appetite to expand and scale – either driven by existing business owners or their management teams making moves happen. The findings mirror what we’re seeing on the ground with growing demand and increasing use of business loans to fund all types of acquisitions. Working with SMEs, these deals can be complex and require a funder that is fully flexible, pragmatic and adopts a holistic approach to transactions and the parties involved.
“The aim of our upcoming webinar is to talk brokers through the process of completing a business acquisition transaction, so they can communicate confidently with their client. With our open-minded approach to funding and expertise in this area, it is a good opportunity for us to support brokers and their clients in buying a business.”
Brokers interesting in joining the Asset Advantage business acquisition webinar can register here.
