BDO Stoy Hayward indicate increased flexibility in midmarket

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The UK is to witness an influx of venture capital over the next 12 months, with much of the new investment earmarked as development capital for privately owned, UK mid-market businesses seeking to grow. According to new research from BDO Stoy Hayward Corporate Finance, around 64% of venture capitalists expect their level of investments to rise in the coming year and over half will be looking to provide development capital alongside their usual buyout activity. The trend, which is peculiar to private equity houses operating in the mid-market - companies with a turnover up to Â£200m - is being fuelled by two factors. Fewer opportunities to fund buyouts are forcing venture capitalists to be more flexible in their investment patterns. Meanwhile the recovery of the capital markets means that many private equity houses will seek to exit many of their current investments over the coming year. Around 79% expect to see an increase in exiting their investments as trade buyers re-emerge, the public markets open up and secondary buyouts become more widely accepted. The outcome for mid-market businesses is clear; more funding from venture capitalists will be available to grow private UK business and for entrepreneurs seeking to de-risk their personal position. Some sectors are also more in demand. Outsourcing (55%), healthcare (50%) and IT and telecoms (32%) ranked as the top three most attractive sectors for investment among private equity houses.