Post-pandemic manufacturers eye private equity opportunities

Roger Buckley, UK Industrials M&A Partner at BDO said research by his company in collaboration with Make UK demonstrate strong interest in the commercial opportunity.

The last quarter report for 2021 revealed that more than one in thrre survey respondents third (34%) of manufacturers were considering private equity investment to help fund the growth of their business, he said. 

“As manufacturers warm up to the idea of PE investment to help fund the growth their business, the fundamental drivers for strong deal activity are in place,” remarked Buckley. 

“We would expect the pent-up appetite and sheer quantity of dry powder to convert to some serious deal flow in the manufacturing sector this year, particularly among mid-sized businesses with strong growth ambitions.”

Nearly three in four (70%) of respondents claimed their company had a good understanding of how private equity works – an increase of 10% compared to 2019.

While 45% believe private equity would be more attractive if investors had longer-term investment intentions, more than half (51%) concur that PE investors bring much more to the table than an injection of money, saying they would also benefit from the additional skills, expertise and credibility that such investment brings.

Buckley, UK Industrials M&A Partner at BDO, said: “[Manufacturers] entered the year with their eyes wide open to the challenges ahead, most notably the intense costs pressures they are facing. However, they are doing so with a renewed sense of confidence, knowing they have battled the last few years with unrivalled resilience.”

In 2021, UK deal completions rose to their highest level since 2008 said BDO, with 2,782 deals completed by both trade and private equity buyers– up 42% on 2020.

Photo: private equity offers opportunities for firms wishing to embrace greater automation