The hidden strengths of UK smaller companies, September 2023

Eustace Santa Barbara, co-manager of the IFSL Marlborough Special Situations fund, discusses how mid and small cap companies have fared in the current economic environment marked by higher interest rates and inflation. Despite challenges faced by smaller companies, Eustace emphasises their long-term growth potential and the benefits of their agility and innovation.

He also highlights that smaller companies tend to outperform larger ones over time due to various factors like entrepreneurial leadership, being in niche markets, and management alignment with shareholders. We wrap up by discussing the increased M&A activity in the smaller company sector – where international firms are willing to pay a premium for cheap UK companies.