Recent research has shown that nearly a fifth of UK small and medium-sized businesses (SMEs) will not be able to survive in the next four weeks due to the coronavirus lockdown.
The Corporate Finance Network surveyed 13,000 SMEs, and found that 18% are likely to collapse within the next four weeks, despite the financial support measures recently announced by the UK government. It also predicts that almost four million people will lose their jobs in the next few weeks.
Following its research, the Corporate Finance Network has suggested that the government should encourage small businesses to take over at-risk businesses in their industry “with a view to retaining the employees and maintaining the trade, and turning it around once the lockdown is over.”
Founder Kirsty McGregor said: “We have taken it upon ourselves to create a robust and fully researched ‘plug and play’ solution for the logistics of this SME rescue scheme, and we already have in place a portal to advertise the businesses on, accountants on stand-by to advise on the structure of any deal, and lawyers to prepare the legal documentation, all working to minimum fees using streamlined agreements, and all can be finalised to launch within a week.
“We are asking the Treasury to fully consider our proposal, with them underpinning it with grants for supporting employment – possibly distributed via the 38 Local Enterprise Partnerships network and the equivalent in Scotland, Wales and Northern Ireland. In addition, it would require a series of tax reliefs for corporation tax and longer-term capital gains tax, which represents a return for the risk the government is asking companies to take when merging with a failing business.
“Historically, over the last three years in the UK, there has been just over 4,500 acquisitions by SMEs; to save a significant percentage of the UK’s economy and keeping almost four million people in jobs, we need to encourage and facilitate 250,000 deals within the next few weeks. We can absolutely do this by incentivising them, supporting them, and with the full backing and incentive of the UK government.
“We have the professionals and infrastructure in place – now we are asking the chancellor and government to take a briefing from us to understand how it could work, and ask that a scheme such as this is put this in place before it is too late.”