Deal activity in the Midlands marked its strongest year to date in 2022, with 1,068 transactions up by 2.3% year on year and a total value of £26.8bn, up by 22.6%, according to Experian’s M&A review.
The Midlands was the UK’s busiest region for deal making outside of London and the South East, with an involvement in 12% of total value and 15% of the total volume of all UK deals.
Value analysis shows that Midlands mega deals valued at over £1bn were up by 20% to six transactions, while there was also a strong upturn in the smaller deal segment.
Experian suggests that 2022 was a period for big ticket exits and less private equity investment, with six acquisitions and only three IBOs, and four deals with an exit. Overall IBO and SBOs were down by 20% compared to 2021 and the volume of deals funded by venture capital fell by 11% to 135 transactions, bucking the national trend.
There was a significant cross-border element to Midlands deal making and 2022 was the busiest ever year for Midlands outbound investment in terms of deal volume, with 54 deals – up 35% year on year.
Meanwhile, inward deals were up by 20%, with 91 deals representing the highest figure for overseas M&A into Midlands-based companies since 2007.
By industry, the volume of transactions in the Midlands’ manufacturing sector remained consistent from 2021 to 2022 retaining the top spot in terms of both volume and value, up by just over 1% for each year on year.
Despite wholesale and retail volumes also remaining stable as the second most active sector in the Midlands with 257 transactions the value of these dropped around 50% compared to the previous year.
Most sectors have seen a positive improvement in the volume and value of deals, in line with the overall increase in transactions for the region. However, there were some notable exceptions with professional services dropping by 8% to 222 deals during 2022 and infocomms, which fell by 3.6% to 188 deals.
Experian’s research further shows a decline in the volume of private equity funded transactions in the Midlands, but the volume of deals funded by the first and second most active investors in the region, Midlands Engine Investment Fund and Business Growth Fund increased from 12 and ten in 2021 to 13 and 12 last year, respectively – suggesting that the core investors are still finding deals in the region.
In contrast the volume of debt funded deals has increased in the Midlands by both volume and value up by 6% and 34% on the last year results.
The two most prolific debt providers were HSBC with 12 (totalling £49m) and Shawbrook Bank with nine deals, while SME Capital and Thincats both provided debt for eight transactions each.
