Fed: Small businesses on the hunt for bargains

AAP General News (Australia)
04-08-2009
Fed: Small businesses on the hunt for bargains

By Colin Brinsden, Economics Correspondent

CANBERRA, April 8 AAP - Nearly half of small Australian businesses intend to buy their
way out of the global downturn with the takeover of competitors at bargain prices, a new
survey shows.

Research by business consultancy Grant Thornton International found 47 per cent of
businesses were planning to grow through acquisition this year, with 82 per cent targeting
domestic firms.

The number was significantly higher than the global average of 37 per cent.

The mining states of Western Australia and Queensland were the most aggressive.

Fifty-six per cent of WA respondents and 54 per cent of Queensland businesses were
planning to grow through acquisition in the next three years.

"Due to the general slowdown in China and South-East Asia, Australian businesses are
beginning to take advantage of the current bargains that are available," Grant Thornton
Australia spokesman Tony Markwell said.

"This is an ideal time for those Australian businesses which have the capacity to purchase
and capitalise on the weaker market position of their competitors.

"Domestic acquisition will put these businesses in a stronger position for when the
market turns, which it eventually will."

Among the 250 Australian respondents to the global survey, the key reasons to grow
were the need to build scale within the existing business (47 per cent), a desire to gain
access to new geographic markets (39 per cent), and the need to access lower-cost operations
(27 per cent).

An interest in acquiring new technologies or established brands was put at 24 per cent.

The survey also found a significant drop in the proportion of privately held businesses
planning on selling up within the next three years.

Just 14 per cent were expecting to sell up in 2009 compared to 22 per cent in 2008.

However, Australia still had more than double the global average of firms hoping to
exit (six per cent), and is second only to New Zealand in terms of plans to sell (18 per
cent).

"With the shutters coming down across the rest of the world, it seems likely that domestic
firms will turn their attentions inwards when planning their next strategic investment,"

Mr Markwell said.

AAP cb/kms/tnf

KEYWORD: ACQUISITIIONS

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