Expansion and MBOs drive surge in business acquisition funding

Business growth ambitions and management buy-outs are driving demand for business acquisition funding among UK SMEs, according to new research from independent finance provider Asset Advantage.

More than half (53%) of commercial finance brokers surveyed said their clients’ desire to expand existing businesses was the main reason for seeking acquisition funding. A further one in four brokers identified management buy-outs (MBOs), where management teams purchase the business they work for or buy out a business partner, as a leading motivation.

Just over a quarter (27%) cited management buy-ins (MBIs), where new management teams take over established firms, while 25% pointed to mergers or competitor buy-outs aimed at consolidating market position.

The findings are part of Asset Advantage’s latest survey of commercial finance brokers, which assesses lender activity, market demand and broader economic sentiment.

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.”