InSight

Exit and Growth Strategies for Middle Market Businesses

Manufacturing M&A on a Roll

By Kim Levin | Jul 15, 2014

Middle Market PulseRecent data suggests that mergers and acquisitions in the middle-market manufacturing sector are on a roll in 2014 and not seemingly slowing down any time soon. Deloitte’s recently published annual Corporate Development Survey found that 62 per cent of executives from the manufacturing industry intend to increase mergers and acquisitions activity between now and 2014. This is much higher than the overall average of 46 percent across all industry categories who are thinking of increasing M&A. What is the cause of this uptick in activity in manufacturing?

Manufacturing as a sector was hard hit during the recession and many business owners worked tirelessly to keep their businesses afloat. For those manufacturing businesses that came through healthy, now is a great time to plan for growth. However, many business owners weren’t quite as fortunate. Even though the crisis is over, they’re just plain tired.   They see this as a window within which to sell the business and get out. With both ample buyers and a supply of ready sellers, activity should continue to rise.

Manufacturing M&A can achieve many different goals, from expanded capabilities and capacities, expanded and complementary product lines, access to new or improved technologies to new or improved territory or distribution channels. Regardless of the objective, once a business owner has decided to grow by acquisition, the first step in the process is a carefully constructed plan. For most middle market business owners this may be the first experience they will have exploring, identifying and negotiating a purchase or sale. Is this something they can take on themselves? Maybe…but, in all likelihood they may be better served continuing to concentrate on the day to day operation of their business and passing on the M&A duties to an experienced professional who can advocate on their behalf.

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