Oversea Investors Compete to Acquiring UK Businesses

Buyers from overseas are snapping up UK businesses, while the domestic buyers remain cautious .

Recent figures show that 75 per cent of UK company takeovers now being completed by foreign buyers. Just ten years ago, the majority of UK takeovers were completed domestically.

The European financial crisis, which is causing uncertainty and a lack of confidence among UK companies, has in turn led to lower business valuations throughout Europe. The UK is also especially attractive as it has no rules against foreign investment, encouraging foreign buyers who may otherwise have looked for businesses to buy in Australia, Canada or the US.

In terms of the size of businesses, mid-market acquisitions seem to be attracting the most attention from foreign buyers. There is a 86 per cent increase in overseas acquisitions of UK companies with revenue between £5million to £50 million a year.  While the smaller firms, with revenue less than £5 million a year, attracting buyers from abroad, however, remains significantly lower.

For those interested in attracting offers from abroad, there are several tactics that could help them to get noticed. Starting joint ventures with foreign businesses or undertaking PR activities abroad can help. Most importantly, however, could be ensuring they are compliant with international regulations.

However, domestic sellers don’t always want an international buyer. In fact, cultural differences can cause problems and even miscarriage. Cross border deals tend to take much longer to complete. A experienced mediator often is the key to ensure the seller achieve the right deal.

Buyers from overseas often want management to continue to oversee operations for many years. Owner-managed business selling due to retirement needs to consider this factor.  The owner need to either delayed retirement of finding an interim management solution.

Any seller needs to carefully weigh up the pros and cons to selling to overseas buyers as their individual situations will dictate whether this is a good option for them. Cautious UK buyers, on the other hand, need to realise that they are up against some serious competition from overseas entrepreneurs who have cash in their pockets and who aren’t afraid to spend it.

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