Number of SME-corporate deals falls for first time in four years

The number of deals between SMEs and large businesses has fallen, despite big firms spending more on collaborations with small businesses than on research and development.

Figures from Bond Dickinson showed that the number of deals between large organisations and SMEs fell by 28 per cent in 2016/17 following three consecutive years of increases.

However, corporates still spent £21 billion with small businesses in 1,111 deals during the last tax year, compared to the £16 billion they spent on research and development.

The number of deals between large and small firms had previously risen from 1,326 during the 2013/14 tax year to a peak of 1,536 in 2015/16, the report said.

Since 2013/14, large organisations made a total of 5,447 deals with UK SMEs, spending more than £102 billion and representing more than a seventh of total business investment.

Their UK research and development spend over the same period totalled £61 billion.

“Collaboration with SMEs has become a key strategy for delivering corporate innovation,” said Jonathan Blair, managing partner at Bond Dickinson, commenting on the findings.

“Business leaders know that neither corporates nor SMEs are perfectly built to deliver innovation alone, but the reach and power of one, combined with the agility of the other can be a potent combination.

“With the economic uncertainty in both the UK and Europe, the short-term hiatus in deals is understandable, but innovation continues to be a key priority for businesses facing disruption from all corners.

“On the brink of a major shift in its international trade relationships, the UK has much to gain from these dynamic partnerships between PLCs and startups.”

The figures showed that financial services companies made more – and higher-value – deals with small businesses in the last four years than large organisations from any other sector, investing more than £31 billion and making up 34 per cent of the national deal volume.

For more from the report, see the Bond Dickinson website.

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