The last 3 years have certainly been busy years for the sale and acquisition of Owner Managed SME businesses. It has recently been reported in the press that M&A deal values dropped by 33% to $265bn in 2023 compared to 2022. This has been put down to rising interest rates and a concerning outlook for the UK economy, combined with stricter antitrust enforcement and ongoing geopolitical tensions curbing the appetite for deal making in 2023.
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The bulk of this figure applies to large corporate deals which simply swamp any impact of an uptick or reduction in sales and acquisitions of Owner Managed SMEs with deal values of £1m to £20m.

When it comes to SME business sales, there are a number of “nuts and bolts” factors driving business sales and acquisitions, for business owners and buyers alike.

  • Many SME businesses have grown and thrived over the last 3 years, and so owners are at an ideal inflexion point either to cash in on the asset they have developed or to seek a corporate partner for the next stage of growth.
  • Succession is key to a business continuity and growth. With SME businesses which have a relatively small management pool, succession and finance often need to be sought externally.
  • Nobody ever gets younger and for business owners contemplating retirement, someone has to take over the helm at some point.
  • The past five years has seen a lot of change in the work place dynamics and a re-evaluation of the work-life balance, not just for employees but business owners too.
  • The average age of the business owner enquiring with us about a business sale has dropped from well into the 60’s to the mid 50’s.
  • There is an ever evolving pool of buyers in the market, with many individuals looking to leave corporate life and/or city investments firms to enter the entrepreneurial business world. These individuals have had successful careers to-date so can bring important skills and resources.
  • With organic growth set to get tougher, many sectors in our view are set for a period of consolidation, bringing more Trade Buyers with cash into the market.

Coming into 2024 we look forward to bringing a number of new sale mandates - well established, profitable and sustainable businesses - to the market in the coming months.

The environment for SME sales, mergers and acquisitions continues to evolve with the impact of inflation and increased interest rates. Indeed, higher interest rates and the need to exercise some restraint in leveraging an acquisition, together with an incentive to use cash reserves rather than have them eroded by inflation in the bank, has in our view improved the profile of buyers and their general approach to the acquisition process.

Whilst inflation and interest rates look set to fall again over the next year, it remains in the balance whether they will return to the sustained low levels we have seen over the past 10 years.

As always though, buyers’ focus remains on the sustainability of the business in terms of its management, key customers and prospects for continued growth.


Not sure whether now is the right time to sell your business? Talk to us now

We are always happy to offer advice on valuation and what performance metrics you need to achieve your desired deal value, as well as offer general advice on the various options for exiting your business and when is the right time to sell.

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About The Author

Hornblower specializes in business sales and acquisitions for the Engineering, Technology and B2B services, and Facilities Management sectors. Typical clients have a turnover of £750k to £15m. With offices in London, Nottingham, Bristol and Dublin we operate across the UK and internationally. Our main activity is selling businesses. We also provide valuations and carry out targeted acquisition searches.

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