When it comes down to finding a suitable business acquisition, it stands to reason that you always want to look to invest in a growing market. In the UK right now, there is one sector that is thriving at a rate that is eclipsing almost every other: manufacturing,
According to the latest Experian Corpfin data and analysis from national law firm Irwin Mitchell merger and acquisition (M&A) activity in the UK manufacturing industry has hit the highest level in six years. In the second quarter of 2014 alone manufacturers were the targets of 200 deals; in the year to date there have been 383 M&As in this space, a 28 per cent rise on last year.
To complement this, data from the Office of National Statistics reveals that in the first half of 2009 there were 1,597 manufacturing company failures. In the last half of 2013 this had dropped to 911 failures, a decrease of 43 per cent. As was outlined in recent Business Sale Report analysis; the market is clearly alive and kicking.
Falling numbers of insolvencies and increasing M&A activity are usually pretty reliable indicators of a sector’s health. And while a business acquisition will often be focused on expansion within the same vertical one it is already operating in, for those looking for a fresh challenge, manufacturing is demonstrably a good place to look.
It is an industry that formed the backbone to the British economy for a long time and while it witnessed a steady decline over a number of years because of cheaper foreign competitors, manufacturing is clearly now re-establishing itself as a major contributor to GDP.
Naturally a number of businesses will still fall into administration – it can often be the case of one big deal falling through or a fault in the supply chain – so for those looking for inorganic expansion or simply looking to get a foothold in a new market, the manufacturing industry is well worth exploring for distressed businesses to acquire.
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