Member Article

Mergers and acquisitions provide food for thought in the South East

Mergers and acquisitions are causing the food and drink sector to grow according to a new report from accountancy and business advisory firm BDO LLP in the South East.

The food and drink sector has annual revenues of £95.4bn and is the single largest manufacturing sector in the UK.

It grew by 7% last year partly due to the merger and acquisition activity in 2014.

Kevin Cook, partner and head of manufacturing at BDO LLP in the South East, said: “In an effort to compete with stores such as Aldi and Lidl, there are considerable discounting efforts from the big four supermarkets.

“Combine this with savvy shoppers who continue to be driven by price and transparency, and you can see how mounting pressure is being put on manufacturers and processors to produce quality products at a lower cost.

“These businesses are being squeezed in the middle and organic growth is a challenge. With improving debt markets and a trend of increasing valuation multiples, the sector is ripe for M&A activity and we’re seeing many boardrooms putting it back on the agenda.

“As the big four supermarkets review supplier relationships, we would also anticipate more consolidation specifically in the mid-market as companies look to create operational efficiencies.”

This was posted in Bdaily's Members' News section by Sophia Taha .