How M&A is helping UK companies 'buy' growth

A Greek tragedy and metaphorical fireworks in China have provided rich material for headline writers so far this year. Meanwhile in the UK, the economy is continuing to strengthen and companies are operating in an environment of little or no inflation, combined with very low interest rates.

The availability of cheap money is powering an increase in merger and acquisition activity among smaller companies. Businesses can borrow at very low rates to finance acquisitions or they can use cash that would otherwise be earning little or nothing in terms of a real return. Such acquisitions can be a highly effective way to enhance earnings, allowing a company to buy growth that would not be happening organically. And for those that are growing organically it is an opportunity for an additional boost to earnings. The fact corporate cash is being put to work in this way, rather than...