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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 were announced, 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.

Manufacturing

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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Laurence  Gavin