Manufacturing M&A is Back - But Will It Last?

Manufacturing M&A is Back - But Will It Last?

The UK manufacturing sector has bounced back, with M&A activity rising 11% in 2024. According to BDO’s Manufacturing Deals Review, deal volumes increased from 707 in 2023 to 782 in 2024, marking a return to pre-2023 levels.

But is this a short-term spike, or the start of a sustained trend?

A Surge in Deals - What Changed?

2024 was a year of two halves. The first six months were slow, weighed down by election uncertainty and economic caution. Then came a sharp rebound - 475 deals closed in the second half of the year, largely due to concerns over Capital Gains Tax and Business Asset Disposal Relief changes.

The rush to complete transactions raises a key question: Was this a one-off acceleration, or are we entering a new phase of industrial consolidation?

Sectors Leading the Way

Not all areas of manufacturing saw the same growth. The most active sectors were:

? Engineering services – M&A activity rose 26%, driven by government investment in data centres and infrastructure.

? Packaging and materials – Deal volumes increased 18%, reflecting demand for sustainable and localised supply chains.

? Advanced manufacturing, chemicals, and aerospace – Investors focused on automation, reshoring, and efficiency gains.

For consulting leaders, this signals a shift. Businesses aren’t just seeking cost savings; they need strategic guidance on digital transformation, automation, and supply chain resilience to stay competitive.

The Risks That Could Slow Momentum

Despite the strong rebound, manufacturing still faces serious challenges:

? Labour shortages and wage inflation – Hiring and retention pressures remain a key concern.

? Regulatory changes – Rising National Insurance contributions and employment law shifts could impact business confidence.

? Geopolitical uncertainty – Trade barriers and supply chain disruptions continue to complicate cross-border deals.

BDO’s research suggests 26% of UK manufacturers are considering selling all or part of their operations within the next two years. The opportunity for strategic M&A is there - but only for those who can navigate the risks.

Looking Ahead - Short-Term Surge or Lasting Growth?

Despite ongoing challenges, investor interest in UK manufacturing remains strong, particularly in automation, industrial tech, and reshoring strategies.

The real question is: Can this M&A momentum hold, or was it simply driven by tax concerns?

For consulting firms, the focus should be on:

? Advising on M&A strategy - beyond transactions, businesses need direction on long-term growth.

? Helping firms build resilience - automation and supply chain agility will determine future success.

? Aligning with key investment trends - sustainability and digital transformation are no longer optional.

At Burwood Partners, we work closely with consulting firms, investors, and portfolio companies to secure the leadership talent that drives M&A success.

What’s your take - are we seeing a temporary spike, or the start of a new wave of industrial M&A?