Latest Data Shows Growth In Private Equity Backed Deals In The Sector

A new report on M&A activity involving UK-based manufacturing companies has revealed a significant growth in deal activity in the last three months along with signs of greater private equity interest within the sector.

Using data and analysis from Experian, the global information services company, national law firm Irwin Mitchell found that 167 manufacturing deals were completed in the last three months. This represents a 22% increase on the previous quarter and the highest number in a three month period for two years.

Highlighting an increasingly positive picture for M&A within the sector, the study also found that the volume of manufacturing transactions after the first nine months of 2015 was higher when compared to the same period in 2014 and 2013.

Just over a quarter (26%) of manufacturing deals for the year so far have been in London and the South East, however there continue to be signs that the manufacturing businesses in other parts of England are generating more activity.

Last year, for example, London and the South East accounted for 29% of all M&A but the rate so far for this year is the lowest since the study’s start date in 2008.

The North West has increased its share of deals, moving up to 13%, however in Yorkshire and the West Midlands, levels have dipped slightly.

There was also a slight increase across England in private equity backed deals with 19 transactions being financed in this way compared to 14 in Q2 and 15 in Q1.

However, despite the stronger quarter, levels of private equity interest in the sector are still lower than they were in 2014. So far this year 10.6% of manufacturing M&A has been backed by private equity whilst last year the rate stood at 12.8%

Interestingly, although London has seen its proportion of manufacturing M&A fall, its share of manufacturing private equity deals has increased. In the most recent quarter, 40% of private equity backed manufacturing M&A involved businesses that were based in the UK.

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

Expert Opinion

“The picture for manufacturing M&A is improving once again and we are seeing some interesting trends emerging. The sector is driving more deals and although there has been a greater spread of activity across England, the proportion of private equity backed manufacturing deals is in the South East. The increase in activity highlighted in this latest analysis mirrors what we saw during the last couple of months and our pipeline would suggest that there will be a strong final three months to the year.” Chris Rawstron - Partner