ACCOUNTANCY AGE BIG QUESTION: FDs fear small businesses will be pushed out by mega-mergers

Deals such as the merger of GlaxoWellcome and SmithKline Beecham has cast a shadow over smaller companies.

In this week’s Accountancy Age/Reed Accountancy Personnel Big Question 31% of FDs said they believed large-scale mergers threaten the future of SMEs, while a further 13% remained undecided.

FDs said that economies of scale would enable larger companies to offer cheaper prices, squeeze profit margins and create tough conditions for smaller companies to compete in.

Other directors pointed to the problems they encountered when attracting investment.

‘As a small company on the stock exchange, we find it difficult to get institutional investors as they tend not to be interested in the smaller companies and are more interested in looking at the larger blue-chip companies. The larger corporations present less risk,’ said David Pearson, financial director at engineers Waterman Partnership.

But a number of FDs said there would always be room for smaller niche companies and said opportunities arose out of mergers due to slower decision processes.

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