A total of 67 acquisitions took place in the manufacturing industry in the third quarter of 2023. This is 20% more than in the same quarter a year earlier. Almost about 45% of the acquisitions involved private equity parties.
This is according to BDO's 'M&A Deal and Economic Update Q3 2023'. The accountancy firm points to opportunities presented by the increasing interest from private equity parties for manufacturing companies. For instance, such parties often have access to capital and expertise. Thus, they can support manufacturing companies in entering into strategic partnerships, realising scale and value creation.
More frequent cross-border deals
What is striking is that the share of cross-border mergers and acquisitions in the manufacturing industry rose again in Q3. BDO points to a broader trend where foreign buyers are increasingly involved in deals.
As an explanation for this development, BDO points, among other things, to the strong reputation of the Dutch manufacturing industry abroad. For instance, Dutch manufacturing companies are known for their innovative, high-quality products.
At the same time, the Netherlands offers an interesting business climate for foreign parties. This is partly due to the presence of high-quality physical and digital infrastructure and the stable political and economic climate.
Subsectors continue to grow
BDO points out that overall Dutch manufacturing shrank in both Q2 and Q3. However, some subsectors still show growth. These include (high-tech) mechanical engineering, food and transport equipment industries.
Companies in the manufacturing industry are facing several challenges. For instance, sustainability and digitalisation are affecting customer demands and the way customers want to be served.
Supply chain disruptions
At the same time, many manufacturing companies struggled with disruptions in their supply chains. Among other things, due to global conflicts and/or shortages of raw materials. BDO warns about the impact of this. For instance, it can lead to production delays and higher costs. The accountancy firm therefore advises manufacturing companies to proactively and continuously evaluate the supply chain, and if necessary, identify alternatives in time.
Author: Wouter Hoeffnagel
Image: Gerd Altmann via Pixabay
