THE number of shareholder changes in the North East was the second lowest in the UK during the second half of 2011 and first half of this year, according to a new report.
Around 190 private businesses in the North East experienced a change in shareholding during the period, with only Northern Ireland reporting fewer, said the report from Barclays.
Its study tracks shareholder changes in growing private businesses as a measure of entrepreneurial activity.
However, the Barclays Entrepreneurs Index showed that the average profitability of the North East companies reached £2.01m, which is among the highest in the country, alongside Scotland and London.
The report tracks one component of the entrepreneurial lifecycle, examining shareholder changes of growing businesses with turnovers of £5m to £200m.
It works on the basis that the driving force behind a partial or full change of shareholding in a growing company is likely to be a liquidity event, triggered by individuals selling their stakes in businesses.
Andrew Miller, regional director of Barclays Wealth and Investment Management in Newcastle, said: “The decline in the number of shares being sold in growing companies probably 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. Some have used this period to cut costs, focus on key clients and reduce inventory, therefore becoming healthier.
“For these more profitable and therefore ‘attractive’ companies, there are buyers. It is difficult to know whether this is a short or long-term trend, but, based on this data, business owners need to contemplate managing their businesses and associated risks further into the future.”