As part of its Acquisition for Accelerated Growth initiative, the Chamber recently awarded Leger the mandate to conduct a survey of 300 leaders of SMEs in Greater Montréal. The survey results offer an overview of the intentions of business leaders with respect to acquisitions and the main challenges SMEs expect in their acquisition efforts. Here are the highlights of the survey.
Acquisitions: a strategy with many advantages
There are a number of reasons why businesses make acquisitions. When executives of SMEs were asked about it, a number came readily to mind. One of them stands out in particular: more than
Other reasons noted include:
- Accessing new markets
- Expanding the product or service offer
- Increasing competitiveness
- Increasing profitability
- Acquiring strategic talent
- Reducing operating costs
The survey also showed that Montréal entrepreneurs are ambitious: 255 companies (85%) have a growth plan and 72 of them (24%) have short-term plans for an acquisition.
A favourable economic context and many business opportunities
Québec’s economic indicators reveal that the economy is running at full steam. Growth in GDP reached a record level of 3.5% in Montréal in 2017, and for 2018 the outlook for GDP growth in Québec fluctuates around 2%[1]. The unemployment rate is at a historic low of 5.6% for the entire province and 6% for the city. At the same time, low interest rates have enabled access to financing. Québec’s financial ecosystem is also doing well: banks and investment funds have the capital to support entrepreneurs, and businesses are investing.
In a context where thousands of Québec companies will have to find a new owner in the coming years because of an absence of a succession, there are plenty of business opportunities. Our survey also indicates that 11% of business leaders plan to sell in the next five years, retirement being the main reason given in half of those cases.
Profitability and access to financing are central concerns
Entrepreneurs who want to acquire a business need to take a number of factors into account. According to SME managers surveyed, the most important of those factors are:
- Evaluating profitability: 18%
- Identifying the acquisition target: 15%
- Accessing financing: 13%
- Developing a business plan: 10%
Challenges to anticipate
The survey also sought to identify the difficulties SMEs expect to encounter in their acquisition efforts. Nearly a quarter of all managers (23%) anticipate facing challenges of access to financing and profitability, with labour and human resources issues coming second (14%) in terms of difficulties to overcome. These are followed by synergy between companies (10%), stakeholder relations (8%), whether information received reflects the actual situation of the company acquired (7%) and legal issues (6%).
Find out more by reading the results of the Chamber’s survey:
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