In order to achieve rapid growth, Europe’s fast-growth companies are turning to joint ventures, alliances and minority stakes, new research shows.
38 per cent of revenue growth in Europe’s fastest growing companies over the past three years is attributable to mergers and acquisitions (M&A), whereas 62 per cent has resulted from organic growth and non-M&A activities.
According to the report entitled ‘Pacesetters: How Europe’s fastest-growing companies stay ahead of the pack’, published by law firm Pinsent Masons, 40 per cent of companies cited joint ventures and alliances as their most important drivers of growth over the past three years, and 82 per cent said they had acquired a minority stake in another company. Licensing or franchising arrangements were also high on the list of factors for growth (65 per cent), as were equity joint ventures (60 per cent).
Commenting, Edward Stead, Head of Private Equity at Pinsent Masons, comments: “This trend towards collaboration through alliances and joint ventures reflects an increasing focus on partnership rather than control. These are partnership capital deals conducted on a grown-up basis where both sides are looking to work together, rather than the acquirer taking control. The varied deal structures being adopted reflect the need to move quickly to gain market advantage while taking a commercial approach to risk.”
And in separate news, research shows that American businesses are increasingly taking advantage of the weakness of the pound against the dollar, to acquire some of the UK’s most successful firms at favourable prices. The value of deals involving US companies buying UK businesses more than doubled to £79 billion in 2017-18, while the value of deals from EU firms to the UK has dropped 5 per cent to £13.3 billion.
At Beavis Morgan, we have acted on significant number of M&A deals for SME and owner-managed businesses. We too are entrepreneurs and have done deals as principals and as advisers to clients. We know our way around from both sides – our strong corporate finance and advisory offering, as well as our understanding of priorities for all stakeholders in the often challenging sale process, positions us well to assist in both the buying and selling of businesses.