BDO: supply chain resilience key for M&A in manufacturing

By Georgia Wilson
Latest report from BDO reveals the UK manufacturing M&A market will remain active in 2021...

Driven by the desire to make supply chains more resilient, BDO’s latest report - Manufacturing Deal Review 2020 - reveals that the manufacturing M&A market will remain active in 2021. 

M&A trends in manufacturing

Within the report BDO details that as a result of the supply chain vulnerabilities exposed following the pandemic and BREXIT, there is likely to be an increased appetite for deals that allows organisations to onshore, re-shore or near-shore supply.

Other driving forces identified include corporations expecting to reposition themselves by making strategic acquisitions that diversify their markets and technologies, as well as the impact 2020 has had on sub-sectors that are ready for consolidation.

“Deal activity held up remarkably well in 2020, and the market looks set to remain active in 2021. Many corporates have significant cash reserves to invest and private equity firms sitting on considerable stores of dry powder are competing to acquire quality manufacturing businesses that have proven their resilience over the last year,” commented Roger Buckley, UK Industrials Mergers & Acquisitions Partner at BDO.

Report findings

Interests in M&A activity in manufacturing was resilient in 2020, with almost 600 deals completed. Whilst a 13% decrease compared to 2019, BDO attributes the decline to the Q2 lockdown where deals dropped by 55% compared to Q1. M&A activity did however increase by 45% in Q3 and 91% in Q4.

During 2020, engineering remained the most active sub-sector, accounting for 26% of deals, followed by food and drink (13%), building products (12%) and life science (12%), which was the fastest growing sub-sector with deal volumes rising 68%.

“After the challenges of 2020, it’s unsurprising that many manufacturers are reviewing their supply base and we anticipate market movement as operators take steps to reshape supply chains. The pandemic has also focused minds on how markets will develop over the longer term, with corporates positioning themselves for a different future in which digitalisation, automation, sustainability and ESG appear higher on the agenda,” added Buckley.

For more information on manufacturing topics - please take a look at the latest edition of Manufacturing Global.

Follow us on LinkedIn and Twitter.

Share

Featured Articles

What to see and do at GSMA MWC Shanghai 2024

At the 2024 GSMA MWC in Shanghai, guests will learn more about the future of 5G and IoT, as well as the role of mobile connectivity in manufacturing

EV Recycling Driven By Tata Steel, Nucor and Dowa Holdings

Market projected growth for EV recycling set to go from US$551bn in 2024 to US$768bn by 2029 with Tata Steel and Nucor embracing ferrous metal recycling

Brooke Weddle: Manufacturing Needs A Rebrand

Brooke Weddle, senior partner at Mckinsey, sat down with Manufacturing Digital to discuss methods to address manufacturing's global hiring crisis

Immensa and Intaj Suhar partner to boost Omani manufacturing

Procurement & Supply Chain

Bain & Company Report: OEMs and Digital Transformation

Smart Manufacturing

The Factory of the Future: Manufacturers' Biggest Challenges

Smart Manufacturing