Research of private equity managers by corporate finance advisers at BDO suggests a relatively buoyant period for manufacturers who want to sell or raise finance for growth and expansion.
Nearly one-third (28 per cent) of private equity houses have ranked manufacturing as one of the top three sectors for investment activity and 20 per cent say it will be one of the most successful sectors when it comes to mergers and acquisition (M&A) valuations.
However, 28 per cent disagree and say the sector will suffer further declines in valuation.
Tom Lawton, head of manufacturing at BDO, said: ‘Private equity is ready for a ramp up in investment activity with more than 90 per cent saying they will increase the rate of investments and close more deals. But in manufacturing, knowing the right investors to discuss M&A with is essential.
‘Businesses have been vocal in complaining about lack of access to debt, but on the equity side, access to risk capital has never been better. There is unprecedented availability of private equity that still needs to be invested.’
Jamie Austin, corporate finance partner, BDO, added: ‘Meanwhile, PE managers say the sales of older investments were unsustainably low in 2009, with most citing delays of between one and two years, but the forecast for the next 18 months heralds a resurgence of exit activity growing by 53 per cent next year and 76 per cent in 2012.
‘With high demand for deals now evident, owners who are quicker to bring their business to market may get a better price because if they beat the rush next year, they will get special attention.’