Expansion plans and management buy-outs have emerged as the leading reasons behind business acquisition funding, according to new research from SME finance provider Asset Advantage.
The lender’s latest broker survey found that more than half (53%) of commercial finance brokers said their clients were primarily seeking funding to expand existing businesses.
A further one-in-four identified management buy-outs (MBOs), where existing management teams purchase the business they work for or buy out a partner, as a key motivation.
Just over a quarter (27%) of brokers pointed to management buy-ins – where new teams take over established firms – while 25% cited mergers or competitor acquisitions designed to consolidate operations and reduce market competition.
Asset Advantage, which provides funding to UK SMEs through asset finance and business loans of up to £1 million, conducts regular surveys to gauge broker sentiment and lender activity across the market.
Its business loan products, which start from £75,000, are frequently used to fund acquisitions, MBOs and MBIs, with the lender typically able to finance the full loan amount.
The findings come as Asset Advantage prepares to host a business acquisition webinar for commercial brokers on Wednesday 5 November. The online session will guide brokers through the process of securing acquisition funding and supporting clients with buy-ins, buy-outs and business partner purchases.
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.”
He added that the forthcoming webinar would help brokers feel more confident when advising clients on acquisition deals. “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,” he said.
