South East: NVM portfolio of region's SMEs shows strong employment growth

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TBM Team

Private equity investment in SMEs can be linked to a marked increase in employment, according to a survey conducted by NVM Private Equity (NVM). The survey of NVM's portfolio of 36 unquoted private-equity-backed SMEs looks at the trends in recruitment following investment.

SMEs account for over 59% of private sector employment and the Association of Investment Companies (AIC) recently reported that 80% of 257 SMEs surveyed have seen an increase in employment since receiving private equity investment in the period from 1997 to 2013.

Key findings taken from NVM's six South East-based portfolio companies working in the business services, industrials and technology/IT sectors, include:
- Businesses collectively experienced 51% growth in staff numbers since NVM first invested.
- South East-based businesses have a 12% share of employment growth across NVM’s UK portfolio.
- The main reasons for recruiting more staff were to support organic growth, new products and services, skills gap and investment in central operations.
- The majority of employees were recruited for sales and marketing, support, management and technical roles.
- Most companies still source staff via recruitment firms, advert placements, job centre or recommendation. No firms surveyed use social media.
- All businesses surveyed will recruit more staff in 2015 as a result of organic growth and expansion.

Youth employment
- 23% of staff recruited were aged 18-24, with some entering the business via graduate and apprentice schemes.

Pay and job security
- The average pay increase across businesses was 3.2% - well above the rate of inflation (0.5% as at December 2014).
- The majority of businesses expect pay levels to increase over the next 12 months.
- 91% of staff recruited work in full-time positions. No employees are in temporary or contract positions.
NVM tends to invest at a later stage of a company's development, with SMEs receiving between £2 million and £10m of private equity funding mostly for management buyouts or development capital.

TBM Team