Between January and March 2023, the number of outbound cross-border deals for Midlands-based companies rose by seven per cent from the previous quarter, with 15 deals completed across the region, according to the latest analysis from Deloitte’s Midlands Cross Border Deals Radar.
The research, conducted quarterly in collaboration with Experian Market IQ, tracks inbound and outbound M&A activity between investors and corporates in the Midlands and overseas. The results from the first quarter of 2023 reveal that outbound dealmaking across the Midlands remained consistent with the last quarter of 2022. In the same period there was a decrease in the number of inbound deals made.
Outbound investment from the Midlands
In Q1 2023 15 outbound deals were completed, an increase of 25 per cent on the equivalent 2022 period. The financial and insurance sector continued to be the most popular market for outbound investment from the Midlands, with five deals completing in the first three months of 2023. Three outbound deals were also completed in the wholesale and retail trade sector, reflective of a continued confidence across both markets.
The most popular target countries for outbound investments were in Western Europe with businesses in both the Netherlands and Ireland securing four deals each. Two outbound investments from the Midlands were also made into the US.
Between the East and West Midlands, the West Midlands showed particular strength with nine outbound investment deals, the highest quarterly number since Q4 2021 when 11 outbound deals were completed.
Inbound investment into the Midlands
Following record levels of inbound investment in 2022 where a total of 91 inbound deals completed, the first quarter of 2023 saw a reduction in the number of inbound investments into the Midlands. The level of investment deals into the Midlands dropped to 13 deals in Q1 2023, compared to 21 deals in Q4 2022, and 17 deals in Q1 2022. The US was the most active investor in the Midlands, accounting for five deals, whilst Canada and Ireland accounted for two each.
Although the overall number of inbound deals fell across the Midlands, the region’s manufacturing sector remained desirable to overseas investors. Six of the 13 inward deals (46 per cent) were completed in the manufacturing sector, whilst wholesale and retail accounted for a further two.
Nick Carr, corporate finance director at Deloitte, said: “Whilst recent economic uncertainty has undoubtedly impacted UK investment levels, it’s encouraging to see continued strong levels of outbound investment from Midlands-based businesses.
“Although we have seen a drop in the number of inbound deals completed in Q1 this year, with the economic climate now stabilising, we’re beginning to see investment levels pick up, building momentum as we move through 2023. Our latest Deloitte CFO Survey, released in April, also showed a marked uptick in business confidence in the first quarter of the year, evident of the positive sentiment amongst business leaders in the UK.”