North West manufacturers see increased M&A activity despite nationwide stall

Manufacturers across the North West have bucked a nationwide trend and increased mergers and acquisitions (M&A) activity in the second quarter of this year compared to Q1 2015.

Data from global information services firm Experian showed that the total number of manufacturing deals involving companies based in the North West rose by 23% in Q2.

The North West was the only region in England to see a rise in the number of M&A deals being finalised. Meanwhile, in terms of overall volume, the only regions to beat the North West were London and the South East.

Andrea Cropley is a partner and head of corporate in the North of England at law firm Irwin Mitchell, which analysed the Experian data. She said: “The increase in deal numbers in the North West is good to see because generally deal activity in the sector has stalled, reflecting the national picture and also the general fall in output across the sector.

“Private equity interest has reduced substantially and I expect that it will remain so until the sector as a whole shows signs of consistent improvement.”

Despite the growth, the number of deals completed in the North West so far in 2015 was the lowest reported since 2008.

Additionally, the North West accounted for 11.3% of England’s manufacturing deals, a drop from 12.9% last year. This was more than Yorkshire’s share of the deals, which stood at 8.5%.

Speaking further, Andrea said: “There are signs of improvement though and although the overall manufacturing sector is facing numerous challenges, there are plenty of sub sectors that are booming and I expect that this will fuel greater M&A over the coming months.

“Our deal pipeline looks strong for the rest of 2015 and I remain optimistic.”

Data from the Office of National Statistics shows that May was the second consecutive month of decreased production levels in UK manufacturing. The organisation found that output dropped by 0.6% after a decline in April of 0.4%. In the three months to May, manufacturing dipped to 4.6% below what it was in 2008, at the beginning of the recession.

On a national scale, the sector’s M&A activity showed a year-on-year decrease of 10%.