Significant Reduction In Volume Of Private Equity Interest In Sector

The number of manufacturing deals across England in the last three months was the lowest number recorded in any quarter since 2008 according to a new report which has also revealed a significant reduction in private equity interest in the sector.

Analysis by national law firm Irwin Mitchell of data provided by Experian, the global information service*, has highlighted that the number of manufacturing deals in the second quarter of 2015 fell to 109 - a reduction of 35% compared to the previous three months.

M&A activity in the sector in the first half of the year stood at 257 - 10% lower than the same period in 2014.

Significantly, the number of private equity backed transactions amongst manufacturing businesses fell considerably from 14 to 10. Only 9% of the deals completed during the six months of 2015 were financed through private equity – the lowest proportion since 2012.

The latest statistics follow a disappointing set of output figures for the sector. Announced at the beginning of July, official figures from the Office for National Statistics (ONS) show that production levels in the manufacturing sector fell for the second month in a row in May.

ONS said output fell by 0.6% following a decline of 0.4% in April. Manufacturing in the three months to May was 4.6% below its level at the start of the recession in 2008.

Expert Opinion

“The level of deal activity in Q1 was relatively strong so it’s disappointing that this hasn’t continued through into Q2.

“Some areas within the manufacturing sector are booming but I think these figures reflect the general industry statistics that highlight falling output levels within the sector. Private equity interest has reduced substantially and I expect that it will remain so until the sector as a whole shows signs of consistent improvement.”
Chris Rawstron - Partner

There was a mixed picture in deal activity across the all regions within England with all areas, except the North West, seeing manufacturing deal numbers fall.

London and the South East retained its dominant position with a 28% of share of manufacturing M&A, however this figure was lower than the total percentage figure recorded in 2014.

*Data sourced from Experian’s proprietary Corpfin M&A deals database.