Wed, 22 Mar 2023 | BUSINESS NEWS
M&A activity involving UK manufacturing businesses reached its highest level since 2016 last year, driven by continuing interest from international buyers and venture capital investors. Early signs also indicate that activity could rise even further during 2023.
According to analysis of Experian Market IQ data by law firm Irwin Mitchell, there were 1,344 M&A deals involving UK manufacturing businesses last year, compared to 1,285 in 2021 and 1,231 in 2020.
2022’s activity was the second highest in the last ten years, beaten only by the 1,537 deals seen during 2016. Despite the sector being among the worst affected by the recent surge in energy prices, 2022 saw a significant decline in restructuring transactions, which accounted for just 1 per cent of deals, compared to 9 per cent in 2021. 57 per cent of deals were acquisitions, while 4 per cent were MBOs.
Reflecting a broader trend in UK M&A, overseas bidders were among the most active in UK manufacturing deals last year, with 30 per cent of transactions involving an overseas buyer. The most active buyers were those from the US (accounting for 8 per cent of overseas bidders), followed by Sweden (3.5 per cent), Germany and France (both 2.3 per cent).
22.6 per cent of transactions (303 deals) involved backing from venture capital or private equity, this was roughly in line with figures from the previous year, during which 22.9 per cent of deals (295) involved PE or VC backing.
There were 316 transactions involving manufacturing businesses based in London and the South-East and over a third of these deals (36 per cent) involved VC backing, a considerable increase on the national average (22 per cent VC-backed).
Manufacturing sector expert and Irwin Mitchell corporate partner Emma Callow commented: “This latest analysis may look surprising bearing in mind the challenges faced by economy last year and although activity dipped in the last quarter of 2022, these figures certainly reflect how resilient the manufacturing sector is.”
“It’s clear that UK manufacturers are highly attractive to overseas buyers and also venture capital. At Irwin Mitchell we have recently advised a US PE client in the sector on an acquisition in the UK as well a South African listed company on a substantial UK acquisition, so the statistics are borne out by what we are seeing in practice.”
“We have seen deal flow in the sector continue to be strong and early signs show that activity in 2023 may be even stronger than 2022.”
Read about a recent private equity investment in a UK manufacturing firm.
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