Business opts for M&A amid uncertainty

Cautious UK companies are planning to turn to takeover activity to drive growth as “geo-political concerns” pose constraints on organic growth, a new report says.

Over half of UK businessess (51 per cent) plan merger and acquisition (M&A) activity in the next 12 months, according to today’sreport, accountancy giant EY’S 16th Global Capital Confidence Barometer.

That figure is up three percentage points from October 2016, but slightly lagging the 56 per cent global figure for M&A strategy.

At the same time, there has been an 11 per cent fall in the number of businesses expecting growth to be internally generated amid factors such as Brexit uncertainty.

The report said: “Instead, companies are putting greater emphasis on inorganic growth, especially joint ventures (JVS) and alliances, where almost a quarter of respondents (23 per cent) expect growth compared to 13 per cent just six months ago.”

Ally Scott, EY’S head of transaction advisory services in Scotland, said: “UK companies are adjusting their strategies to maximise growth opportunities and protect margins amid changing market dynamics at home and abroad.

“Strategic deals that will help businesses access new markets, new geographies and new technologies look likely to remain high on the boardroom list of priorities.” l Scottish business output fell to a four-year low of 95.6 in April, down from 95.9 in March, according to the latest report from accountants and business advisory firm, BDO. 0 Ally Scott says firms are adjusting strategies