Private equity stokes manufacturing M&A

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Increased economic confidence and rising private equity interest boosted mergers and acquisitions in manufacturing last year.

Private equity investors were behind almost a third of deals in Yorkshire over the last six months of 2014, up substantially from the first half, Irwin Mitchell said.

Research from Experian, commissioned by the law firm, found a seven per cent rise in manufacturing deal activity in the region across 2014.

A total of 77 transactions involving manufacturers were completed, the highest since 2008 and up from 72 in 2013.

The last quarter of 2014 was particularly busy for deals, with 20 agreed - more than double the 2013 figures. It marked the busiest three-month period since Irwin Mitchell began its annual survey six years ago.

Private equity investors were behind 27.7 per cent of deals in the last six months of the year. In the first six months, private equity investors backed just 14.6 per cent of transactions.

Irwin Mitchell corporate and commercial partner Andrea Cropley said the region had performed well in manufacturing M&A last year.

She said: “Confidence within the sector has certainly contributed to a big increase in private equity backing.

“The levels that we saw during the last six months of 2014 were similar to those that we saw during 2013 when 28 per cent of manufacturing M&A was private equity backed and it will be interesting to see whether these levels of activity will continue.”

Recent surveys pointed to a slowdown in growth in the latter months of the year, despite the sector’s positive outlook.

The Markit/CIPS Purchasing Managers’ Index fell to 52.5 for December, down from 53.3 in October and November. A figure above 50 denotes growth.

“We believe that deal flow within the sector will remain strong and although recent surveys pointed to a tough December for manufacturers generally, the sector has remained resilient and has continued to grow,” Ms Cropley said.