Thursday 3 January 2013

2013: Cautiously Optimistic

As the City starts to come back to life following some excellent festive parties and a much needed break, the outlook seems to be improving for small businesses in 2013.

Access to capital

2012 was a struggle for many businesses with access to capital remaining tight and budgets being cut in an atmosphere of extreme economic uncertainty. So called “zombie companies” became apparent, just about breaking even and able to service debts due to low interest rates, but without enough capital to grow realistically. However a more stable global economy thanks to the Eurozone and US fiscal cliff deals alongside measures by the UK government to support small businesses could mean 2013 is a much more promising prospect for those that made it through 2012.

While the LSE’s junior market, AIM was down narrowly in 2012 compared with 2011, we are already seeing signs that 2013 is picking up for PLCs with a good growth story. Away from the public markets, there is a lot of interest in private companies with the EIS and VCT schemes making it easier for investors to get a slice of the action in companies that wish to remain private. In addition, if an exit within the next 12 months is viable and visible, institutional investors seem to be more willing to consider bridging the gap between private equity and public markets, providing businesses with the capital they need to grow and enjoying the upside of getting in before IPO.

Growth areas

Many advisers strengthened their natural resources teams toward the end of 2012 so we could expect to see growth in this sector, indeed four of the top five AIM companies by market cap are in this area. In addition, clean energy also remains important with the constant threat of global warming as evidenced by many of the freak weather conditions we saw last year. We are also seeing increased interest in medical devices, particularly diagnostics which could improve efficiency in a vast number of areas from drug development to day to day health management. We can also expect huge growth in technology and the shift to mobile has created a significant number of entrepreneurs from tech savvy youngsters with a great idea for a new app.

Just under a third of companies that joined AIM in 2012 were international and we expect China, Russia and other emerging markets to boost growth in 2013, with more international companies looking to the UK for investment.


With David Cameron urging G8 countries to work together “firing up economies and driving prosperity” and business leaders believing the threat of a triple dip recession is receding, we could be in a position to capitalise on last year’s modest growth in 2013. We won’t have the expense of the Jubilee or Olympics (which nonetheless both went a long way to lift the public’s spirits in a difficult year) and begin the year in a much more settled and positive global economy. Confidence has been low over the last few years but the current business conditions and sheer will for things to improve means surely things are looking up for 2013.


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