More than a third of privately held businesses in this country expect to grow by acquisition during the next three years, well up on the global average.A global survey of more than 7000 privately-held businesses by accounting firm Grant Thornton found 37
More than a third of privately held businesses in this country expect to grow by acquisition during the next three years, well up on the global average.
A global survey of more than 7000 privately-held businesses by accounting firm Grant Thornton found 37 percent of New Zealand companies were looking to grow by acquisition, compared with the global average of 26 percent.
Last year the figure for New Zealand companies was 35 percent, which then was close to the global average.
Martin Gray, head of lead advisory for Grant Thornton New Zealand, said that the change in percentages compared with the rest of the world was indicative of how hard some economies have been hit in the past 18 months.
The key reasons for New Zealand firms to grow through acquisition were to gain access to new geographic markets (53 firms), build scale (47), acquire new technology or established brands (31) and gain access to lower cost operations (23).
"Over the last 18 months many businesses have taken actions to reduce costs. This year we are likely to see some stronger companies undertaking strategic acquisitions or mergers to drive further efficiency, resume growth and enhance margins," Mr Gray said.
As to where buyers were expected to come from, the expectations of business owners in this country mirrored international trends, he said.
In 2009 family members were the most anticipated purchaser globally, but as the world started to come out of recession trade buyers and financial investors were once again to the fore.
In the latest survey, trade buyers were seen as the most likely single group to buy a business, accounting for 27 percent of anticipated purchasers in the event of a change of ownership.
Mr Gray said he believed the sector with the most potential for New Zealand businesses when it came to mergers and acquisitions was the role of management, which was globally seen as providing 20 percent of anticipated purchasers.
"Whereas selling to competitors is always a difficult option, having management buy out a business has advantages. However, for the present figure to rise about 20 percent, we need to find better structures to allow this to happen, especially around the financing of the acquisition," Mr Gray said.
An area where this country scores well below much of the rest of the world is in the percentage of businesses planning to undertake a public listing.
In New Zealand in the new report the figure is 2 percent, below the global average of 7 percent but above the 1 percent figure in Australia.
