Finance · 23 May 2017

Collaborative investment between large and small firms crashes after three-year peak

Collaborative investment
The figures brought together joint business ventures, mergers and minority stake purchases

Corporate deals with large organisations and small businesses in the UK fell by 28 per cent in 2016/17, according to new figures, following a three-year increase in collaborative investment.

Research from legal firm Bond Dickinson into the number of joint ventures, mergers and acquisitions and minority stake purchases between large and small firms showed a total of 1,111 deals struck in the last financial year.

The 1,536 such deals in 2015/16 represented the peak of a three-year increase in collaborative investment.

Commenting on the sharp decline in collaborative investment, Jonathan Blair, managing partner at Bond Dickinson, said partnerships with small firms were a “key strategy for delivering corporate innovation”

“Business leaders know that neither corporates nor SMEs are perfectly built to deliver innovation alone, but the reach and power of one, combined with the agility of the other can be a potent combination,” Blair said in a statement.

The figures suggested the financial sector retained the strongest source of collaborative investment.

The £31bn investment from large financial services firms in the past four years represented over a third of all deals with small companies, while seeing a decline in deals six per cent below the national average last year.

Bond Dickinson attributed the decline in collaborative investment to wider stagnation in business activity in the months following the EU referendum in June 2016. Figures from the Office for National Statistics (ONS) showed business investment shrank by 1.5 per cent in 2016 – the first decline since 2009.

“With the economic uncertainty in both the UK and Europe the short-term hiatus in deals is understandable, but innovation continues to be a key priority for businesses facing disruption from all corners,” Blair added.

“On the brink of a major shift in its international trade relationships the UK has much to gain from these dynamic partnerships between PLCs and startups.”

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ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

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