By Daniel Hunter
UK businesses should continue to avoid the risk of M&A deals over the next 12 months, say the majority of senior directors and managers polled by Interim Partners, the number one provider of interim executives to the private sector.
The survey found that only 6% of interim executives said that UK businesses should pursue M&A deals as their growth strategy over the next year. 60% said that, instead, UK businesses should focus attention on a more straightforward policy of pursuing organic growth.
Interim executives are managers or other senior executives, at or just below board-level, who are recruited on a short term basis.
“Although the economy is recovering and confidence is growing senior business executives say the time is still not right to leverage up and pursue M&A deals," Doug Baird, Managing Director of Interim Partners, commented.
“Interim executives are those senior managers brought in after a takeover to find efficiencies and synergies between the two businesses, so they understand the risks of M&A more than most.
“However, corporate coffers are beginning to overflow with cash and the argument is being made that valuations of bid targets are still relatively cheap.”
Interim Partners says that the growing confidence of UK PLC is indicated by interim managers downgrading the importance of cost-cutting and debt reduction for UK businesses.
Just 6% of senior managers say costs cutting should be a priority down from 11% last year, and only 8% highlight debt reduction as a priority down from 12% last year.
“Once the cost cutting and debt reduction tails off then we are likely to see sentiment improve not just within the company concerned and among its employees but also in the company’s entire supply chain," Baird added.
Interim executives picked out R&D as the area where businesses are most in need of investment — with 45% of the interims polled say that R&D needed more funding.
“R&D budgets have come under pressure across UK PLC during the recession — senior managers argue that this is not sustainable and the investment in R&D needs to be rebuilt. Without R&D investment UK PLC will find it hard to compete with international competitors in sectors from manufacturing through to IT and biotech," Baird concluded.
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