Index shows Irish firms making loss

A new report by Barclays assessing buying and selling of companies across Ireland and Britain has found that Ireland was the only country where on average businesses experienced a loss.

Barclays Entrepreneurs Index found over 440 growing Irish firms saw a change in shareholding between the second half of 2011 and first half of 2012.

The report is the first of its type to track shareholder changes in growing businesses with turnovers between €6m and €248m across Ireland and Britain.

The report, based on data from the Companies Registration Office, found that due to difficult trading conditions, the growing companies in Ireland that saw shareholder changes experienced an average loss of €550,000.

The report is based on the assumption that shareholder changes are caused by firms running out of funds due to shareholders selling stakes.

Ian Talbot, CEO of Chambers Ireland, said: “These findings are largely consistent with what we’re seeing on the ground.

“Certain sectors have been affected by the troubles in the construction industry, which has caused a slump in profits and had a knock-on effect on associated sectors and services. However, there are also opportunities in this climate for surviving companies in the market to acquire smaller businesses, which in turn, creates growth and employment.”

Ireland was the only region where the companies measured averaged a loss.

In the North, the average profit of the 132 firms measured was €1.7m. London returned the highest figure with an average profit of €4.27m from the 2,000 firms that have seen changes in shareholdings.

The Irish companies included in the study were also on average the youngest across England and Ireland. The average age of an Irish company was 15.5 years. The UK average was 20 years.

However 15 years is a sizeable period suggesting these companies were not being set up and sold on, or flipped, quickly.

Pat McCormack, head of wealth and investment management at Barclays Ireland said: “The overall decline in shareholder changes in these companies indicates that it is harder for businesses to be sold, mainly due to the continued uncertainty in the global economy.

“Acquirers are less willing to take risks, and the business owners themselves are more likely to sit it out until conditions improve.”