It is six months since our last review of UK Industrials M&A. In that time, we have been pleased to see UK manufacturers largely ignore an at times frustratingly and unjustly negative political and press commentary, by delivering modest but sustained growth and consistently adding jobs.
Order books are strong and the critical PMI for UK manufacturing scored 53 or above in every reported month except one in 2018. To put this into context, we dipped below 50 in both 2013 and 2014 and as recently as 2016! Press commentary has implied that the strong score of 54.2 in December was principally driven by customers stocking up ahead of Brexit, but the score isn’t actually that out of line with the H2 average.
It is clear trade acquirers and investors remain positive on UK manufacturing as deal volumes in H2 2018 were ahead of the same period last year (234 deals vs. 220) and multiples achieved were also marginally higher.
Indeed, Livingstone’s Industrials team in the UK continued the strong run we had in the first half with a number of closures in H2 including the sale of Cursor Controls to discoverIE Group plc and the sale of Chess Technologies to another listed buyer, Cohort plc. It was particularly pleasing to see two UK plc’s investing in these high IP and heavily international technical manufacturers. Shortly after we closed the Chess deal they garnered some good press coverage as they kindly lent one of their world-leading anti-drone systems to Gatwick Airport to allow the airport to stop its drone-related problems and get people heading off for Christmas on their planes! Gatwick has now installed Chess’ technology in the wake of the drone incursion in December.
We enter 2019 with a strong and exciting pipeline and if we didn’t work with you in 2018 we hope to have the opportunity this year.