Merger and acquisition activity is to surge among the UK's small-and medium-sized enterprises (SMEs) next year, after a new survey indicated that one in ten are considering making an acquisition in the near future.

The figures from the invoice and asset-based lender Venture Finance, have shown that the activity will likely be in line with the predictions made by the Bank of England. The lender surveyed 500 SME business leaders to obtain the statistics, which also showed that a quarter of the ten per cent of companies planning to make acquisitions aim to do so within the next six months.

More than a quarter of all the businesses surveyed revealed that they have the financial means to currently realistically consider making an acquisition, with the average war chest of SMEs amounting to £190,000.

The main obstacle standing between these businesses and actually taking over another one, however, is a lack of experience in deal-making. A third of companies said they had no idea how to commence an acquisition or merger, while 35 per cent said they would not know how to position themselves correctly.

Venture's Steve Websdale explained, "Despite the potential, many SMEs appear to lack the experience required to undertake a smooth acquisition or sale. This could lead to poorly structured deals and financial headaches for first time buyers."

UK retailers could be facing a lean Christmas, if predictions that insolvencies and corporate failures will rise to 2008 levels over the holiday period prove to be true.

Figures from financial services firm, Deloitte, showed that 111 UK retailers entered administration or receivership in the fourth quarter of 2008, falling to 47 and 44 in the same periods in 2009 and 2010 respectively. A number of high profile stumblings in recent months, however – including Best Buy pulling of the UK and Comet being sold for just £2 – have led to economists predicting a hard Christmas.

Ernst & Young's global head of restructuring, Alan Bloom, said, "There are always retailers that go bust over Christmas, but there may be more than usual this year. And retailers are often big employers, so it will be painful."

Retail consultancy, Conlumino, has forecast that British people will spend around £200 million less in December this year – but said that they could rein in their spending even further.

Conlumino's managing director, Neil Saunders, said that the country is likely facing a very bleak start to 2012. Many non-food retailers depend on the Christmas period for around half of their annual profits, and this year's cutting back is likely to break many of them.

Many small- and medium-sized businesses (SMEs) need to stop sitting on stockpiles of cash that they have gradually built up during the economic crisis, and start investing it in growth steps, a leading venture finance expert has said.

Peter Ewen, managing director at Venture Finance, said that many companies have been reluctant to make any larger-scale capital investments while the economic situation has been unstable. He said, however, that it is prime time they start putting their 'war chests' towards growing their businesses onto more solid footing.

"SMEs need to put their heads above the parapet and start exploring their business and financial options," Ewen explained. "Now could be the time to put internal, and external, resources to good use to grow their way out of hard times."

Research carried out by his company showed that 47 per cent of businesses are sitting on investable cash that they are not using in their day-to-day business transactions. The average of the amounts these businesses are holding on to is around £190,000.

Ewen added that SMEs need to start seizing opportunities when they come around, as well as seeking out and grabbing hold of growth when it appears.

"Prudence is obviously important in uncertain times, but SMEs could be taking this too far. Businesses have to ensure they aren't watching prime business opportunities to expand or even acquire pass them by," he explained.

The value of foreign acquisitions by British companies in the second quarter of 2011 fell by more than half from the first quarter total, from £20.7 billion to £10.2 billion.

The figures issued from the Office for National Statistics (ONS) indicated that the value of purchases made in the UK by foreign businesses rose by 57 per cent to £8.5 billion in the same period, indicating that British businesses continue to be highly sought after.

The statistics also showed that British companies have focused their recent acquisition activities within the UK, with domestic acquisitions rising to £2.2 billion in the second quarter of 2011 – up 69 per cent compared with the first quarter of the year, as companies sought out targets closer to home, to make the most of local value.

The head of mergers and acquisitions (M&A) at Ernst & Young, Rhys Philip, said that the findings indicated that the second quarter had brought some "general confidence", with the general settling of macro-economic conditions. He said, however, that figures for the third quarter are going to be anyone's guess, as the deepening Greek crisis and down-grading of the US's credit rating had "thrown everything in the air".

Buyers are swarming around independent financial advisory (IFA) businesses, with eyes for finding new partners or snapping up outright sales, according to a leading British corporate adviser.

Fred Hanson, from London-based IMAS Corporate Advisors, said the impeding implementation of measures laid out in the Retail Distribution Review (RDR) is seeing a lot of companies aim their focus on investing in elevating the standards of their advisers and the qualifications they hold.

He explained that many are looking to do this through buying into established expertise and smaller companies that are seeking greater investment.

“Many are positioning themselves for the environment after the RDR and other acquirers are entirely opportunistic as they see, typically smaller, firms struggling,” Mr Hanson said.

The importance of established client relationships in diverse fields of expertise is also providing impetus behind what Mr Hanson believes will be an imminent surge in the number of IFA transactions taking place. He explained that businesses that are close to their clients and have a honed and specific insight into their needs are very appealing to those that are seeking to diversify the range for products they offer.

Those most in demand are the companies – regardless of their size – that have proved that they are already compliant with the regulations of the RDR, who are likely to see their capital values increase significantly.

Workers' union, Unite, has made further calls this week for a law to protect British companies from what they have called 'predatory takeovers', such as Kraft's controversial buying of Cadbury in 2010.

Jennie Formby, who is Unite's National Officer for Food and Drink, Unite, said that it was clear that the government was procrastinating over bringing in a so-called Cadbury law that many feel is "overwhelming, imperative and urgent."

She explained that it would prevent large-scale takeovers that are solely driven by short-term profits, without concern for a company's products and workforce.

"Since last year's takeover, the government has been very silent on the need for a Cadbury Law which would protect viable British companies from predatory takeovers from financial institutions which have no real interest in the long-term welfare of the company, its employees and product development," she said.

"If the government is really serious about having a vibrant manufacturing policy to help us out of the economic mire, a Cadbury Law should be an integral part of such a strategy – but ministers appear to be dragging their feet."

Ms Formby spoke out after Kraft's chief executive, Irene Rosenfeld, deferred for a third time her appearance before the Business, Innovation and Skills (BIS) Select Committee, which is looking into the sale. In her place she sent the company's corporate affairs director, Marc Firestone.

The value of mergers and acquisitions in the UK reached £3.8 billion in the final quarter of 2010 – its highest value in nearly two years.

The figure – which saw a staggering rise from the £3 billion record for the third quarter of 2010 – took the total value of M&A transactions in 2010 to £10.1 billion. While this total was down significantly on the £12.2 billion total recorded for 2009, the rise in the final quarter has left industry insiders believing that businesses are regaining their confidence in expanding through acquisitions – confidence that took a major knock during the recession.

In all in 2010, there were 61 takeovers of companies that had registered annual turnovers of more than £1 million.

The figures for British businesses making investments in foreign companies were a reversed reflection of the figures for the deals within the UK, with the quarter four figure falling to £3.5 billion from £5.3 billion in quarter three, but the annual total increasing to £12.2 billion from £10.1 billion in 2009.

The figures follow last month's M&A predictions from financial services firm KPMG, that the technology sector is likely to see a lot of activity in 2011, due to increasing confidence in their returns for investors.

A travel centre based in Hagley has been purchased for an undisclosed sum by Good Travel Management, in a strategic acquisition deal.

Good Travel Management, which is headquartered in Hull, has acquired Mercian Travel Centre in a bid to open new markets for the company in the Midlands and the South of England.

As a result of the acquisition, the travel group will now become the sole shareholder in Mercian Travel Centre, following the retirement of its former owner – and founder – John Downing.

Good Travel Management has been trading for 120 years and this purchase marks the first time it has expanded beyond its local area. Specialising in tour operations, trade missions, business travel and high-end leisure travel, the firm is particularly well known for its expertise in arranging trips to the Middle East and Libya.

General manager at Good Travel Management, Kevin Harrison, said, "We are very pleased with this acquisition because Mercian Travel Centre is an extremely good business.

"The firm has experience in a host of travel sectors similar to our own, so it is a good fit with our business. Its record in delivering trade missions was of particular interest because we have been increasingly specialising in this area and the acquisition strengthens our offer," he added.

It has been confirmed that Mercian Travel Centre will continue trading under the same name and all members of staff will be kept on.

The high level of merger and acquisition activity taking place in the first few weeks of this year points to a positive 2011 for the sector, according to industry experts.

The beginning of this year has seen a number of mergers taking place within the PR industry, including the banding together of comms companies Four Communications and travel agency BGB, Brando with Band & Brown and Tavistock's acquisition of Conduit.

The sheer level of deals, coupled with a host of M&A transactions in the last few months of 2010, suggest that the UK PR industry is heading for consolidation following months of fragmentation.

Industry experts explain the rise in M&A volumes as 'defensive' in nature, especially in terms of SMEs, who often look to pool resources and cut costs in a tough economic climate.

Chairman of Huntsworth Communications , Lord Chadlington, said, "Some have found the past three or four years quite difficult and I think a lot of the deals that are currently coming through are defensive."

Founder of Lansons Communications, Tony Langham, "Many agencies … are looking very carefully at their costs, which is pushing them into mergers."

The number of deals happening within SMEs is also likely to lead to larger deals, added Lord Chadlington. "Larger companies are no longer looking for bolt-ons, they want companies with more than 100 people that are not dependent on one individual."

A Cardiff-based office supplies company has made a major acquisition in a bid to grow its turnover and expand its services into Cornwall and Plymouth.

SET Office Supplies is expecting to record a £25 million turnover this year following the acquisition of the Martin Luck Group, which it purchased out of administration.

The office supplies firm is now utilising its acquisition – the biggest that the company has made to date – to further its organic growth. It is already Wales' largest independent office supplies firm, expanding rapidly since its opening in 1974 and selling a range of office supplies from its offices across Swansea, Cardiff, Bristol, Haverfordwest, Cornwall and Plymouth.

Staff numbers now stand at 237 following the acquisition, which secured 64 jobs in the South West of the country.

Neil Griffiths, SET’s managing director, said, “Most of our growth has been organic and this is the first time we’ve acquired a business of a significant size. We previously bought a company in Bristol that was doing £180,000 a year and it is now doing £4m-plus.

“Profits made by the business are reinvested in the business for future growth and to make us financially secure for the next 20 years. We are looking at organic growth over the next two to three years unless something comes along that’s a perfect fit for us,” he added.

Prior to its administration, the Martin Luck Group had a turnover of £7 million.