Manufacturing M&A triumphs six year high

Private equity accounts for 16% of national deals in Q2

A new report highlights that deal activity in the past quarter amongst UK manufacturing firms reached its highest level in six years.

The latest Experian Corpfin data and analysis from UK law firm, Irwin Mitchell, states that manufacturers in the UK were the target of 200 deals during the second quarter of 2014. This compares to 183 in Q1 and takes the total number of deals this year to 383 to 28% more than the same period in past year.

Not since 2008 have the number of manufacturing deals been completed in three months at 200 or more, the report highlights, further demonstrating the current strength of the sector.

The South East boosted its top position with 32.4% of the total volume of manufacturing mergers and acquisitions, whilst the North West received 14.6% of deals, topping Yorkshire, the West Midlands, the South West, the East Midland and East Anglia.

The report also reveals a small increase in the percentage of manufacturing deals which involved private equity. Nationally in the first quarter of 2014, the figure stood at 15.3%, but this increased to 16% in Q2. It was still below levels seen in 2013 when 28.5% of manufacturing mergers and acquisitions was PE backed.

Chris Rawstron, partner and head of Corporate & Commercial at Irwin Mitchell said: “The message is clear. The manufacturing sector is driving a significant amount of mergers and acquisitions activity and with deal flow now 28% higher than at the same time last year, the signs are that we are in for a very strong year.

“There was a slight improvement in Q2 in terms of the number of deals backed by private equity, but the percentage figure is still well down on what we have seen in previous years.

“Despite this, there are some very encouraging signs for the manufacturing sector and it is vital that any company currently considering their strategic options ensures that they take the appropriate professional advice to ensure their position in the market ahead of any sale or purchase is optimised.”