From April to June 2023, the US remained the most active inbound investors, completing four deals, consistent with the previous quarter where five deals were completed. The results reflect a similar trend from last year, where the US was also the most active inbound investor in the Midlands for the first half of 2022, with US companies completing 12 deals in the same period last year.
The research, conducted quarterly by Deloitte in collaboration with Experian Market IQ, tracks inbound and outbound M&A activity between investors and corporates in the Midlands and overseas. From the second quarter of 2023, the results demonstrate consistency with investment into the Midlands from both US and Swedish companies.
Inbound investment into the Midlands:
In Q2 2023, the Midlands saw 11 inward deals, a fall of 26 per cent on the last quarter and a 52 per cent decrease year on year. The West Midlands remained consistent with seven transactions completed in both quarters of 2023 so far whilst deal volume fell in the East Midlands with a 50 per cent decrease from eight inward deals completed in Q1 compared to four in the last quarter.
The information and communication sector was the most popular area for inbound investment with four deals completed in Q2 2023, whereas the manufacturing sector witnessed a drop from seven deals in Q1 2023 to one deal in the last quarter.
Outbound investment from the Midlands:
The level of overall outbound deals from the Midlands fell from 15 deals in Q1 2023 to eight deals in the second quarter, marking a 46 per cent decrease. The results represent an overall decrease of 27 per cent year-on-year from the same period in 2022. The East Midlands experienced steady levels of outbound deal activity with five deals completed in the second quarter compared to six in Q1 whereas outbound deal levels dropped more significantly in the West Midlands, falling from nine to three deals completed between Q1 and Q2.
The financial and insurance sector in the Midlands remained the most popular areas for outbound deals, with three completed in Q2. Consistent with Q1, the US and Ireland remained the most popular regions for outbound investment with four deals completed in each region. The majority of deals completed in Ireland were made up of acquisitions by professional services companies.
Nick Carr, corporate finance director at Deloitte, said: “These latest results continue to reflect the attractiveness of the Midlands market internationally, particularly to both US and Swedish investors. Despite fewer deal completions in the last quarter, this was not unexpected as a result of various economic issues such as rising inflation and interest rates impacting on deal activity. However, with an ongoing pipeline of deals we expect completions to pick up in the second half of the year.
“Although deal volume has dipped from the previous quarter, the transactions we have so far advised on are of particularly high value, creating significant economic opportunities for businesses in the region. The recent successful completion of Sygnature Discovery’s acquisition of NuChem Sciences is just one example of the international scale of the deals that the Midlands market continues to be at the heart of.”
