Buoyant Sector Sees Growth In Private Equity Investment

The number of deals completed within the UK manufacturing sector so far this year is almost a third higher than at the same point in 2013 – says a new industry report.

According to the latest data and analysis from Experian on behalf of law firm, Irwin Mitchell, manufacturers in the UK were the target of 236 deals during the third quarter of 2014. This takes the total number of deals to 619 - 28% more than the same period in 2013.

Reflecting the current strength of the sector, Irwin Mitchell’s report highlights that not since the second quarter of 2008 have the number of manufacturing deals completed in a three month period been this high. 

The South East strengthened its dominant position as the region where the most manufacturing deals were completed. This was followed by the North West, the West Midlands and then Yorkshire. The East Midlands witnessed the biggest rise in the share of activity, moving from 7.1% on Q2 to 12.8% in Q3.

In addition to a strong three months for the sector, there were also signs that the sector was attracting more private equity investment.

Nationally in the first quarter of 2014, the proportion of deals which were backed by private equity stood at 15.3%, but this increased to 16% in Q2. In the most recent quarter the percentage level was 19.9%, which takes the average for the year so far to 17.2%. This is however far lower than 2013 when 28.5% of manufacturing M&A was PE backed.

The report revealed that a quarter of manufacturing deals which were funded through private equity were in the South East region with 20% in the North West.

Chris Rawstron, Partner and Head of Corporate & Commercial at Irwin Mitchell said:

Expert Opinion

The manufacturing sector had a strong first six months for M&A and it looks like the second half of the year will be even stronger.

“In Q2 there was an increase in the number of PE-backed manufacturing deals and this continued in the last three months with almost 20% of transactions being funded via private equity. Although I don’t expect to see investment levels by the end of 2014 to be as high as in the last few years, there are clear signs that more and more private equity is moving into the sector again.

“The market provides significant opportunities for companies in the sector which are assessing their strategic options and it’s vital that they take the appropriate professional advice to ensure their position ahead of any sale or purchase is optimised.”
Chris Rawstron - Partner

This research is based on data sourced from Experian’s proprietary M&A deals database.