A new report from Barclays reveals that shareholder changes within small businesses decreased by 38% between the last half of 2011 and the first half of 2012.
The first report to track one component of the entrepreneurial lifecycle, the Barclays Entrepreneurs Index discovered that industrial, retail and knowledge sectors accounted for 64% of shareholder transactions in the first half of 2012.
Yet these three sectors saw a 33%, 42% and 48% decrease in entrepreneurial activity respectively in the first half of 2012.
Nonetheless, using Companies House data the report uncovered a 29% profitability increase in companies with shareholder changes.
London was revealed to be the most profitable area, with an average profit of £3.45m, followed by Scotland at £2.58m and the North East, where average profits stood at £2.01m.
Richard Phelps, Managing Director, Barclays Wealth and Investment Management believes the results show that investors have become more risk-averse in the current economic climate; he urges business owners to continue working on reducing such risks.
He said, “The decline in the number of shareholder changes in growing companies probably indicates that it is harder for businesses to be sold, mainly due to the continued uncertainty in the global economy.
“Acquirers are less willing to take risks, and the business owners themselves are more likely to sit it out until conditions improve.
“For these more profitable, and therefore ‘attractive’ companies, there are buyers. […] based on this data, business owners have been investing a significant amount of time into their ventures and need to continue managing their businesses and associated risks further into the future.”