New Zealand's small market is driving local companies to buy or merge with companies overseas, as they seek new growth opportunities, according to a survey by Grant Thornton.
The accountancy firm says 39% of small to medium sized businesses are looking to expand by cross-border acquisition, up from 24% a year ago.
The companies surveyed have annual turnovers of between $5m and $100m.
Grant Thornton New Zealand head of advisory, Martin Gray, says a period of consolidation during the global financial crisis has resulted in fewer, but stronger, companies.
He says many are now forced to look overseas to expand because of the limited growth opportunities within New Zealand.
He says getting a better share and control of the whole value chain that their intellectual property and key competitive strengths have overseas will lead to more profitability.
Mr Gray gave as examples Comvita's acquisition of its Hong Kong distributor, which allowed them to tap into a far larger footprint in the Asian market, and children's buggies and other child products company Phil and Ted's acquisitions in the past couple of years.