New research shows the West Midlands has failed to share in a UK-wide investment boost.
The value of mergers and acquisition (M&A) activity in the region has dropped by 40 per cent in the third quarter of the year – despite a huge rise across the country on the back of a giant Vodafone sale.
Research from Experian shows £1.02 billion worth of M&A deals were concluded in the Midlands in the three months to September 30, compared to £1.68 billion in the same period last year.
Meanwhile, separate data from the Centre for Management Buyout Research shows the West Midlands’ private equity market remains subdued, with a total of seven management buyouts this year, down from 10 at the same stage in 2012.
However, John Houlden, transaction support partner for EY in the Midlands, said despite the data activity is picking up. He said: “The West Midlands continues to see low numbers of buyout activity, with just seven deals completed out of the 133 overall in the UK so far in 2013.
“However, these low levels of buyout activity are not reflective of what we are seeing in the market place in terms of the pipeline and deals in progress, so we do expect to see a pick-up in activity towards the end of the year, and going into 2014.”
The CMBOR research, sponsored by EY and Equistone Partners Europe, shows that by the end of quarter three 2013, seven deals private equity deals completed in the West Midlands were worth a total of £110 million, in contrast to £349 million over the same period in 2012. The North West and London have been the most active private equity deals markets in the UK this year, both completing 25 deals each so far this year.
Meanwhile, new Experian research shows a three-fold increase in M&As, the highest quarterly total since before the recession, in the second quarter of 2007. There were 114 deals where an overseas business was acquired by a UK firm in the third quarter – a 7.5 per cent increase on the 106 deals in the same period last year.
Meanwhile, inward investment into the UK was up from 187 deals in the third quarter of 2012 to 195 deals in the same period this year.
This can largely be attributed to Vodafone Group Plc’s £84 billion sale of its US joint venture Verizon Wireless to joint venture partner Verizon Communications Inc.
However, the Midlands did not share in the rise, with a fall of 40 per cent quarter-on-quarter.
Wendy Driver, business development manager at Experian, said: “Although deal volumes remain suppressed, the UK returned a robust set of results in the third quarter, with an upturn in large corporate transactions, and encouraging activity in manufacturing, mining and transport. A stronger M&A market might be closer than we thought.”