West Midlands Attracting More PE But Still Behind Other Regions

A new report has revealed that twice as many private equity deals involving West Midlands-based manufacturing firms completed last year compared to 2012.

According to data from national law firm, Irwin Mitchell, the number of sector deals within the region which were funded by venture capital increased from eight to 16.

Despite this increase and the fact that nationally 28.5 per cent of all manufacturing M&A was private equity-backed in 2013, the figure in the West Midlands stood at only 22 per cent.

This was the lowest rate recorded in all regions in England. The figure was as high as 40 per cent in East Anglia, whilst in the East Midlands it was 26.6 per cent.

The report revealed that the region’s share of national private equity by deal volume increased from 5.2 per cent to 8.8 per cent. This was the highest it had been since 2008.

Although the region’s manufacturers performed more strongly in 2013 than the past in relation to attracting private equity, Irwin Mitchell’s report revealed a slight fall in the overall amount of M&A activity involving West Midlands-based manufacturers during the period.

The number of deals fell by 2.7 per cent in the last 12 months taking the region’s share of national manufacturing M&A to 10.4 per cent. This was the same as Yorkshire and the East Midlands, but it was lower than the North West.

Expert Opinion

Although the report shows that the number of manufacturing deals fell last year in the West Midlands compared to 2012, there are some encouraging signs in terms of private equity which hopefully can be built on during 2014.

“The region saw a 100 per cent increase in the number of PE-backed manufacturing deals, however, as a percentage of all M&A in the sector, it still lags behind other regions and the national figure.

“The manufacturing sector is clearly attractive to private equity at the moment. Faced with this growing appetite and an improving economic picture, ambitious companies here in the region should seriously consider this option whilst they explore opportunities for developing and growing their business.”
Nick Dawson - Partner

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