Europe’s fast-growth companies are turning to alliances, joint ventures and minority stakes to deliver rapid growth, according to new research from international law firm, Pinsent Masons.
The report, titled “Pacesetters: How Europe’s fastest-growing companies stay ahead of the pack“, reveals that an average of 38% of revenue growth in Europe’s fastest growing companies over the last three years is attributable to M&A, whereas 62% has resulted from organic growth and non-M&A activities.
Alliances and joint ventures are the most cited factor amongst the 400 companies surveyed, with 40% listing them in their top three most important drivers of growth over the last three years.
A staggering 82% of the companies surveyed have acquired a minority stake in another company in the last three years. Nearly two thirds (65%) have entered into licensing or franchising arrangements, and 60% have embarked on an equity joint venture.
The research suggests that these external collaborations give fast-growing businesses rapid access to skills, experience, technologies and processes that their own organisations do not yet have.
Edward Stead, who leads Pinsent Masons’ private equity team, comments:
“This trend towards collaboration through alliances and joint ventures reflects an increasing focus on partnership rather than control. These are partnership capital deals conducted on a grown-up basis where both sides are looking to work together, rather than the acquirer taking control. The varied deal structures being adopted reflect the need to move quickly to gain market advantage while taking a commercial approach to risk.”