ALMOST three quarters of UK-listed manufacturing and industrial companies expect M&A activity to increase this year, according to a new report released yesterday.
Interest from private equity firms will be the primary driver for this, according to nearly 44 per cent of the executives surveyed by Deloitte in its bi-annual manufacturing and industrials M&A predictions report.
This was up from 12 per cent of respondents in spring 2013.
“While corporate sector fundamentals have been strong, economic uncertainty over the last few years has significantly dampened corporate risk appetite,” said Ross James, UK corporate finance manufacturing industry leader at Deloitte.
“However, since the start of the year, stronger economic growth forecasts across many western economies, particularly in the UK, have given a major boost to confidence and, as a result, interest in M&A activity.”
Emerging markets were the most likely place for acquisitions, with two thirds considering potential acquisitions in these regions.
Forty-four per cent identified private equity-owned businesses as a primary source of target companies, up from 28 per cent last autumn.
Sixty-nine per cent of respondents said they were likely to enter a new joint venture in the near future and 63 per cent are optimistic about the sector’s financial prospects over the next 12 months. “Our manufacturing and industrial predictions mirror the trends we are seeing in M&A activity across industries,” added James. “The start of 2014 has seen the much anticipated return of strong activity. In just the first four months of 2014, $1.2trn (£720bn) worth of deals have been announced globally.”