Canvassing  opinions from more than 100 leading debt advisors, we gained their insights into activity among UK lower mid-market companies.

Overall, the survey results show a boost in confidence over the last six months, with market activity continuing to pick up following a challenging number of years. While there is a general sense of positivity, broader feedback reflects a focus on the outcomes from the Chancellor’s Budget on 30 November. Advisers highlighted that the lack of clarity on potential changes to Capital Gains Tax and what level it could reach is creating uncertainty for business owners.

The key findings:

• 62% of advisers stated they were seeing higher levels of activity in their pipelines in the last six months, an increase from 36% a year ago. Only 12% stated there was less demand.
• Almost half (46%) believe there is growing demand for funding specifically from owner-managed businesses.
• Macroeconomic issues are cited as the biggest constraint to deal activity, with valuation expectations and deal quality the next most significant challenges.
• The general view on business valuations is that they either haven’t changed (58%) or that they have decreased (31%) in the last six months.
• A majority of advisers (66%) say they are seeing more activity from SMEs than they were six months ago this compares to just 26% a year ago. There is especially a growing appetite for funding from owner-managed businesses.

"Advisers have their fingers on the pulse, and they will see day-to-day how changes in the economy and regulation affect how businesses act. While it is positive to see that advisers are reporting growing appetite to lend and to borrow across the market, clearly there are concerns and activity afoot as business owners get ahead of any potential CGT increases in the budget".

Mike Hackett, Chief Commercial Officer, ThinCats

Full report below