Senior analyst at Plimsoll, David Pattison said that larger companies are looking for ways to develop their business and “tap into exiting revenue and profit streams”.
Plimsoll claims that larger companies have been surviving on margins of 2.1% or less, while 100 of the UK’s top 1,000 companies in this sector are losing money.
It said a series of small acquisitions would provide a quick route to increasing sales for relevantly low cost and a foothold in emerging sectors of the market.
This trend has been fuelled by the eagerness of smaller companies to sell-up to their larger rivals, states Plimsoll.
These smaller companies are being driven by a desire for the stability and security offered by the larger companies and the possibility to accelerate the development.
However 234 smaller companies were identified as having premium profit margins with some reporting sales increases of over 13.8% per year and margins of 5.1%.
Pattison said: “It would be a pity if some of these exceptional businesses went to the wall, or do not get maximum chance to prosper just through lack of funding.”
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