The M&A Boom Within the Engineering Sector - KBS

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The M&A Boom Within the Engineering Sector

The engineering sector has long been a strong contributor to the UK economy. This is certainly something that has not changed in recent years with the ONS reporting that engineering contributed £1.36bn to GDP, which is 22% of the whole UK economy, during the 2019/2020 tax year. Not only is engineering a high financial contributor, the sector also sees high levels of employment within the UK. In August 2020, 19% of all UK employees were working in the engineering and manufacturing sector, making it one of the largest employers in the UK.

Due to the sector’s contribution to UK economy, it is unsurprising that engineering has attracted high levels of interest within Mergers & Acquisitions. KBS Corporate’s Research Team identified over 450 interested parties for companies within the sector alone during the first six months of 2021. This resulted in KBS Corporate selling 10 companies within the engineering sector since January. The majority of this interest came from trade buyers however there is also notable interest from private equity. An example of these high levels of interest is Ingenieur Limited which attracted an impressive 70 interested parties, the majority of which came from UK and oversees trade buyers.

KBS Corporate was able to utilise this interest to attract a large volume of offers for companies based in the engineering sector. In April, KBS Corporate completed the acquisition of Automatic Engineers (Hickley) Ltd by TGM Partners which attracted seven competing offers. This is inline with KBS Corporate reporting an average of ten offers per company sold.

In addition to this KBS Corporate has seen the highest levels of completions within the engineering sector with ten completions since January. The subsector of engineering which we have seen most completions was precision engineering. This included the acquisition of geosynthetic systems provider ABG Limited by BontexGeo, switchgear and electrical distribution specialists Moss Switchgear Services Limited’s acquisition by Otter Controls. KBS Corporate has also seen interest within engineering adjacent companies such as Engineering Safety Consultants, an engineering consultancy firm, who were acquired by ERM Limited.

 

It is clear that there are high levels of buyer interest within the UK engineering sector, which is reflected in an increase in the activity we are experiencing at KBS Corporate. This is supported by the active role the sector plays within the UK economy which is reassuring to investors and trade buyers who are looking for secure investments and acquisitions to accelerate their growth plansafter a tumultuous period last year.

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