- 37% of Leinster SMEs considering M&A, MBO or MBI activity over the coming months
- 37% of Leinster businesses planning to utilise alternative finance such as invoice or asset finance to fund these transactions
- Leinster SMEs planning average investment of €151,755 over the next 12 months
42% of SMEs in Leinster are planning to invest in new staff over the next year while 87% say they are confident for trading over the next year according to a new report from Bibby Financial Services Ireland, a leading provider of financial support and funding solutions to Irish SMEs.
The statistics show that SMEs are planning to spend an average of €151,755 over the next year with the top three areas of investment identified as:
- Staff training and development (42%)
- Digital technology and IT (38%)
- New staff (42%)
The majority of businesses in the region (76%) also say they are either confident or very confident about their business prospects for the remainder of the year and into 2022, with 55% identifying new customers as a top area for growth. As businesses continue to plan for accelerating profit, many are turning to alternative finance to fund growth.
37% of Leinster SMEs are considering M&A, MBO or MBI activity over the coming months compared to 20% in Connaught, 43% in Munster and 40% in Ulster. 37% of these Leinster SMEs, meanwhile, are considering using Invoice Finance or Asset Finance as a funding method for these transactions while 46% of them are considering private equity and 32% are looking at business loans for the same purpose.
Notwithstanding growing optimism, key fiscal and operational challenges still remain for Leinster’s SMEs. 29% of these businesses had to write off a bad debt average of €35,000 since the pandemic began while it is taking 19% of Leinster companies between five and six weeks to get paid.
Key findings show:
- 26% of Leinster businesses need cashflow support more now than before the pandemic compared with 12% in Connaught, 20% in Munster and 10% in Ulster
- A total of 32% of Leinster’s SMEs say will need to renegotiate rates with suppliers or customers compared to 20% in Munster, 16% in Connaught and 50% in Ulster
- 32% of SMEs in Leinster concerned for rising business costs while the same amount will need to renegotiate new rates with customers or suppliers
- 27% have also reported problems with their supply chains or suppliers
Nationally, the Bibby Financial Services Ireland report also states that almost four out of ten (38%) SME’s nationally say they will require additional funding into 2022 as they look beyond the pandemic and return to growth.
Such funding will be vital in ensure businesses can deal with inflation, overcome supply chain disruptions, ramp up recruitment to fulfil demand, and invest. As a result, considering solutions from the private sector that protect against bad debt and offer access to working capital will provide SMEs with certainty of payment and sustainable sources of liquidity.
The pandemic has also offered businesses an opportunity to reflect, with some entrepreneurs and business owners deciding it’s time to restructure, refocus, innovate and grow, while others have come to the conclusion that it’s time to exit their business totally. Over a third businesses (36%) say they are considering merger and acquisitions opportunities in the coming months, while one in ten (9%) SME owners are considering a management buy-in, rising to 19% for wholesale and 33% for transportation businesses. When it comes to funding transactions, SMEs owners consider private equity, business loans and invoice finance as the top three ways to finance merger or acquisition activity.
Garry Holligan, Business Development Manager at Bibby Financial Services Ireland, says that although times have certainly been more testing than ever before, he believes Leinster SMEs are now on the cusp of a strong recovery as we look towards 2022.
”SMEs generally are showing significant resilience after such a turbulent few months, and are remaining positive despite the challenges that still lie ahead. Our new report shows there is genuine light at the end of the tunnel both for businesses and the economy. The time has come to begin to move forward with confidence.
However, as businesses recover and get back on their feet, its concerning that nearly a third say their greatest challenge is rising business costs, while over a quarter say they need cash flow support more than ever before. As a result, the private and public sectors need to remain focused on providing any required financial support to enable SMEs to do what they do best – drive employment, boost output, and fulfil consumer demand.
This help comes in many forms, be it through the provision of funding to unlock cashflow, supporting businesses in overcoming the complexities of trading overseas in a post-Brexit world or helping SMEs to understand changing customer behaviours and transitioning to digital operating models. The research ultimately shows that a diverse range of financial tools including invoice finance will help companies grow and prosper into 2022.”