Earlier on in the day MyTradeTV reported that Synseal had acquired the domestic IGU manufacturing assets of Euroview Manufacturing Limited. You can read about that story here.

This is yet another Synseal acquisition that has expanded the Synseal group as a whole, and should raise yearly revenues to £150m across the group next year according to the company.

But this forms only part of a wider trend that could explode in 2017. And that is an explosion of mergers, buyouts and huge industry consolidation.

Buyout bonanza for 2017

The year started quietly on the M&A front. I think a few of us were wondering when it was actually going to begin. The we had the FIT Show. Then we had Brexit. Then boom. We’ve had a flood of acquisitions and buyouts since. You can catch up on them all by clicking on DGB Features here or up top.

This though, I believe, is only the prelude to what might be a whopper of a M&A year coming up. And it’s the mega groups that we should be keeping an eye on.

Groups like DW3, Polyframe, Synseal and others have been exercising their wallets in the past 12 months or so. Acquiring people and companies, expanding their market share, buying companies that have brought them access to new parts of the market that they didn’t have previously.

Vertical integration has also been a theme this year, with fabricators and manufacturers buying installation businesses or trade counters, giving them direct, permanent access to the home owner and residential market.

But if you believe the hype and the whispers, there’s even more to come. Potentially a whopper of a deal that could really change the dynamic of the industry altogether. There appears to be a lot of wheels in motion across the industry, and we could start to see it’s effects in the coming 12 months.

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The right buying conditions

It would make sense for the acquisition market to kick off during 2017. The market conditions appear to be lining up in just the right way.

Timing is key for any business deal, and as of yet, we’re still a way away from leaving the EU. Yes it does look like Article 50 will be triggered by late March, but that still won’t change anything in terms of the political mechanics for another 18-24 months. So, if a company was thinking of buying another, it would make sense to do it now, whilst some level of certainty remains.

Sterling has stabilised somewhat in recent weeks and months, recovering some lost ground. Some predict it will creep back down during 2017, some say it will churn higher. It does all depend on the Brexit negotiations. Oddly, world currencies are now moved more by politics than by economics. So Brexit negotiations should be something we should all keep an eye on. If you’re buying a business, you probably want it to stay where it is for the time being. A rise will make the party being bought rethink what their sale value might be worth. A fall might make the company being bought think twice about what they’re going to receive. If it stays stable in 2017, as it has done in the past couple of months, that would be no bad thing.

Finance to facilitate deals is very readily available too. With record low interest rates, companies looking to expand are in a good position to go to banks to ask for the funding to make it happen. Whether this continues after we leave the EU remains to be seen. At the moment, it’s highly unlikely that UK interest rates will be going up any time soon.

Right now, I believe there is still a lot of slack in the industry. Too many companies making things and not enough demand to make those things profitable. This is where companies looking to vertically integrate others into their expanding business portfolio can take advantage of these favourable conditions.

I believe there will be a rush to acquire during 2017, before the lay of the land is known for when we leave the EU, which at the moment looks like it will happen before the end of 2019. Either way, 2017 could be a very dynamic and exciting year where we see the very structure of it change before our eyes. It should make for some fun DGB coverage at least!

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