Buyout activity for SMEs at 5 year high

Investment for SMEs is at its highest level for 5 years, according to research from Lyceum Capital and Cass Business School.

Based on private equity investments in 2015 with an enterprise value between £10 million and £100 million, the analysis shows that volume transactions increased by 12% last year, with 87 investments totalling £3.43bn.

Total deal volumes remained between 30%-40% but investments are expected to continue in 2016 with investors focusing on SMEs with perceived earning quality and a good potential for growth.

Investment activity was highest during the second half of 2015. The value of acquisitions in the £25-75 million range grew by 52% to £2bn, indicating an improvement of investor confidence for established SMEs.

The business services and industrial sectors also saw investment increase by 84% and 66% respectively, while the healthcare sector showed a 33% decrease in 2015.

Andrew Aylwin, partner at Lyceum Capital, said:

“In a global economic market plagued with uncertainties ranging from falling commodity prices to volatility in the Far East, it is encouraging to see that the outlook for entrepreneurs and medium sized companies has never looked stronger.

“We expect these businesses to continue to attract increased amounts of investment and grow into industry champions over the next 12 months.”

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