When times are good, investment can seemingly be all about getting in and out as quickly as you can. But when times are more difficult it is clear that a little perseverance is required. New research commissioned by Barclays and carried out by Ledbury Research has shown that fewer shareholders are looking for a quick out.
Of prime importance to the Barclays Entrepreneur Index are changes to entrepreneurial activity between the second half of 2011 and the first half of 2012. The number of growing companies that have changed hands – indicating enterprises with growing revenues between £5m and £200m which have had a change in shareholding during the six-month period – fell by a significant 38% between H2 2011 and H1 2012. Representing a huge change in investment habits, this shows that, with the increased fear over the fate of the eurozone, fewer investors are looking to make fast exits.
However that’s not to say there isn’t money being made. Despite the hesitancy displayed by some investors to pursue new avenues of investment, among the growing companies that did change hands the average profitability rose 29% on the previous six-month period to £1.7m. These results demonstrate that whilst it pays to be circumspect, for some the risks involved are paying huge dividends. What’s more, this is also evidence that perhaps these difficult times are producing greater ownership amongst entrepreneurs, with fewer people willing to grow their business simply to sell it at the first opportunity.
Whilst now is clearly not the time to invest big and get out fast, there is a very definite value in circumspect investing even when the future isn’t all that clear. And for those willing to rise to the challenge, decent profits are certainly within reach.