Despite an extremely challenging year full of political and economic uncertainty, according to research by Experian Corpfin, a leading source of corporate deal information, the level of M&A activity held up well in 2016.
During the year 7,155 transactions
representing a 2.2%
increase on 2015’s total of
7,000 deals. It might surprise
some, but 2016 was, in fact, the
busiest year in terms of transaction
volume since 2007.
Much of the activity was at the
lower end of the market where there
was a significant increase in activity
of almost 10% compared to 2015.
Another notable trend was the substantial leap in the
number of venture capital transactions recorded during
2015, up by an encouraging 17.8% on last year’s figures.
According to Experian Corpfin’s report, the
total value of British M&A reached £283 billion. Whilst
this demonstrated fall compared to 2015, the value is
comparable with levels seen over the last decade.
Overall, the UK was also still found to be Europe’s
most valuable M&A marketplace with values bolstered
by consistently high levels of overseas investment into
UK firms. Out of all these cross-border deals, inbound
transactions tended to target companies in the
Manufacturing, Infocomms and Professional Services
sectors, with US companies being the most acquisitive.
According to Experian Corpfin’s MarketIQ database, the
Manufacturing sector was the second busiest sector in terms of M&A activity
in 2016, as shown in the table above.
During the period there were 1,714 deals completed that related to
manufacturing, with a combined value of £141.5bn. This represents a 5.7%
increase in terms of deal volume but a 40.6% fall in the total value. Although
this is significant, the fall in value was caused mainly by the high number
of smaller deals and this was a trend replicated in other sectors including
Financial Services and Professional Services.
Looking closely at the Manufacturing sector, our own analysis of
Experian Corpfin’s data has revealed that there were 288 private equity
backed UK deals in the manufacturing sector, representing a 4% increase in
the number that was seen in the previous year.
We also discovered that UK Manufacturing deals continue to have
an international dimension. In the last 12 months, for example, 14% of
Manufacturing transactions in the UK involved either an American buyer
purchasing a business here in the UK, or a UK buyer targeting a US-based
manufacturing business. Just over 4% of UK deals involved a German buyer
or target, with Sweden and then the Netherlands posting the next highest
number of sector deals.
It is once again encouraging that UK manufacturers are attracting
interest from overseas, but it would be a significant boost to see more of our
UK-based manufacturing firms looking abroad and targeting organisations
which would allow them to develop and grow their businesses.
Published: 16 May 2017
Focus on Manufacturing - Edition 5
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