Manufacturing M&A activity remains resilient despite challenges - BDO

By Sam Pither

31 March 2023

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UK Manufacturing M&A activity has been resilient despite challenges, according to research published today by accountancy and business advisory firm BDO.

UK manufacturers are continuing to progress M&A strategies, despite the volatile macro-economic landscape. In 2022, there were 793 transactions involving a UK manufacturer, compared with a similar number of 779 in 2021, up from 595 in 2020.

The impressive levels of deal activity is notable given the market headwinds, reflecting both resilience and optimism in the UK manufacturing sector. Private equity maintained strong interest in the market, with buy-outs accounting for 1 in 5 deals.

Proportions of deals across subsectors remained largely unchanged from 2021, with Engineering Services accounting for the largest portion. There was a substantial increase in Manufactured Materials, which saw its share of deal activity increase from 9 per cent to 13 per cent.

The share of deals in Food & Drink declined from 13 per cent in 2021 to 10 per cent in 2022, while Building Products and Life Sciences remained among the top five sectors with the highest deals activity.

Read more - BDO reports strong 2022 in Midlands

In a story of contrasts, inward investment to the UK declined by 14 per cent, with 184 UK businesses sold to overseas acquirers in 2022, while outward investment from the UK increased by 14 per cent with 115 overseas businesses acquired. Investment from North America declined by 34 per cent, but still accounted for 29 per cent of all overseas buyers.

Roger Buckley, UK Industrials M&A Partner at BDO, said: “The UK Manufacturing M&A market has been surprisingly resilient despite considerable headwinds. Investors, corporates and entrepreneurs are still active, making the most of strategic M&A opportunities to safeguard the future and position for growth.

Major themes facing the market include cost pressures, supply chain resilience, the drive to Net Zero, innovation, and sustainability, alongside a wide range of political and economic macro factors.

“There is high scrutiny by investors across the board, but we see plenty of opportunities in the M&A mid-market, attracting high levels of interest, investment and value, particularly where there is a technology or sustainability play adding value.

“M&A strategies aligned with the major market themes of the moment can be a key driver to help businesses position for the future, access funding, attain greater resilience and competitive advantage.”

By Sam Pither

Sam is the Regional Editor of Biz News, responsible for both Hampshire and Dorset.

A new recruit to journalism, Sam started writing for the Business Magazine as a freelancer in May of 2022 after completing his degree in English at University College London. His passion for local businesses and ability to tell a story soon caught the attention of the publication’s management team and have led to his meteoric rise.

Sam, who lives in central Reading, takes a particular interest in technology, gaming and food and drink, having been a chef before starting his degree.