Almost three quarters (73%) of UK-listed manufacturing and industrial companies are expecting a rise in M&A activity over the next 12 months, according to Deloitte.
Research by the Big Four firm found that almost half of companies cited private equity firms looking for an exit as a primary driver for the increase.
Emerging markets were the most likely place for acquisitions, with nearly two-thirds (62%) of UK-based manufacturing companies considering potential acquisitions in these regions.
A significant majority (70%) of respondents describe themselves as acquisitive and in general they do not expect the good availability of debt to change significantly over the next 12 months.
While expectations of deal multiples are that they will increase slightly, the majority do not expect any significant change in the next 12 months.
Commenting on the findings, Ross James, UK corporate finance manufacturing industry leader at Deloitte, said: “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.”
He added: “A significant trend in this survey is the increase of private equity activity in the industry. Nearly 44% of M&A chiefs named this as a primary driver for mergers or acquisitions in the coming months, up 12% from our spring 2013 study. It is clear that CFOs’ increased confidence, coupled with the strong availability of debt, allows for more competition for the available assets – which could push valuations up.”
In the first four months of 2014 alone, $1.2 trillion worth of deals were announced globally.
Sally Percy is editor of The Treasurer