Now that we appear to have emerged from the recession, the Bank of England’s Monetary Policy Committee has been criticised by many commentators (myself included) for the apparent failure of their so-called quantitative easing policy.

This is where the central bank injects new money into the economy. However, the method by which this is done can lead to cash becoming 'trapped' in larger businesses, as they are under no compulsion to spend this money.

Recent studies have indicated a growing trend of larger companies hoarding cash due to a lack of investment and recruitment, which has consequently damaged the SME sector.

It appears that the Funding for Lending scheme has made a small difference to funding conditions for small businesses. However, if the government is serious about tackling the lack of liquidity then it might be better directly investing in infrastructure projects and wholesale supply side reform.

QE has led to a wider pool of large companies with cash reserves, who it seems are increasingly looking to make acquisitions.

With P/E (price to earnings) ratios running at historically low levels, it could be said that there has never been a better time to buy a company.

Indeed, the large number of SME’s without a viable succession plan in place has led to a buyer’s market, as retiring management teams look to offload to any willing buyer.

If you are thinking of buying or selling a business and would like some advice then please get in touch on 01633 213 318.