Shaw & Co, the specialist corporate finance advisory firm, has launched the second in a series of 12 in-depth sector reports that offer an industry’s SME business leaders a powerful benchmarking tool to aid their decision making.

The second report covers the UK Manufacturing & Engineering (M&E) marketplace and segments over 3,918 M&E businesses with earnings in excess of £1m by size and subsector to track their performance, profitability, debt levels and M&A activity.

The report’s key findings include:

• Covid-19: 10% decline in M&E output in 2020 but looking to bounce back strongly with pent-up demand now being satisfied. Nevertheless, it will take until well into 2022 before there is a realistic chance of output matching pre-pandemic levels.
• Mergers & Acquisitions: The M&A market saw 65 deals in the M&E sector in the quarter. Half of the published deals were in the engineering sub-sector with 18% in the electronics engineering and general manufacturing sub-sector. Of note is that just over half of the acquisitions were by UK buyers (52%) with US buyers being the most active internationally with 20%.
• Borrowing: There is now a significant opportunity for alternative lenders to bridge the gap left by the traditional lenders for longer term loans for SMEs.
• Funding Capacity: A good M&E business with solid growth plans could be borrowing up to four times its earnings (Ebitda) for growth projects and acquisitions.
• Super Deduction: Support incentives, such as the Super Deduction tax to encourage capital investment, will help businesses bring forward their investment plans and potentially upgrade technology and improve margins.

Colin Burns, Director – Debt Advisory, at Shaw & Co and editor of the report said: “Larger blue-chip corporates have regular access to this type of analysis from investment banking advisers. However, it is our mission at Shaw & Co to provide SME business leaders with free access to the same market intelligence in a clear, concise and easy-to-use way.

“This report will help SME business owners to benchmark their own and their peers’ performance relative to their sector. It will also provide them with valuable market insight that will enable them to evaluate their relative creditworthiness and attractiveness from a M&A or growth funding perspective, allowing them to make the best decisions for their business and its future.”  

A full copy of the report is available for free download here.

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