The number of small deals increased by 5.1 per cent to 901 in the six months to the end of June, up from 857 in the corresponding period last year.
The £500,000 to £10 million deal segment showed an improvement despite the overall volume of transactions in the UK dropping by 2.9 per cent to 2,776 transactions.
Deals backed by venture capitalists rose by 22 per cent to account for nearly one in four (24 per cent) of small deals in the first half of 2015, suggesting investors believe small businesses can continue to contribute to the UK’s economic recovery. Companies receiving venture capital investment are typically looking to raise finance to grow operations or fund start-up costs.
Forty five per cent of small deals were rights issues, which are also considered to be an indicator of a healthy capital market, while 18 per cent of transactions of this size were acquisitions.
The small deals market has been recovering in recent years after the economic downturn. More than 2,000 transactions were recorded in 2007, before falling to a low of about 1,400 in 2010 and 2011. Last year 1,737 small deals took place in the UK.
Wendy Driver, Business Development Manager at Experian UK&I, believes small businesses can be the driving force behind the growth of the UK economy.
“Small businesses are often described as the drivers of growth and our figures suggest investors believe they will continue to propel the UK economy forward.
Investment allows SMEs to take their business to the next level, while fast-growing companies are an attractive proposition for venture capitalists. Our figures show the market’s appetite for small businesses has steadily increased since 2009, although values have yet to make the same recovery.”
Nearly half (47 per cent) of small deals were in the financial services and insurance sector, rising by 4.1 per cent on the corresponding period last year to reach 420 deals. Information and communication (156 deals); professional, scientific and technical activities (145 deals); and manufacturing (129 deals) were the next busiest sectors.
Overall, the UK’s M&A market experienced a 29.7 per cent increase in deal values. Several high value mega deals pushed the total value of M&A transactions from £155.8 billion in the first half of last year to £202 billion in 2015.
Four out of ten deals took place in Greater London as it continued to dominate the regional picture, despite the volume of deals in the capital falling by 5.2 per cent to 1,151 transactions in the first half of 2015. The East of England, the Midlands, Scotland and the North East were the only areas to experience an increase in deal numbers.