Mergers and acquisitions (M&A) remain a key priority for UK lower mid-market manufacturing businesses, with 29% identifying it as one of their top three core growth strategies over the next three years, according to new research from business advisory group Dow Schofield Watts. As firms navigate an increasingly competitive landscape, M&A is seen as a critical tool for expanding market share, diversifying offerings, and strengthening resilience.
The UK Growth Census, which surveyed 500 businesses with annual turnover between £10m and £150m, highlights a clear appetite for dealmaking, with 22% of manufacturing firms pursuing acquisitions to acquire new talent and capabilities, 20% looking to increase valuation ahead of a future exit, and 18% looking to diversify product or service offerings. For many, M&A is not just a route to scale, it is a strategic imperative to remain competitive in a rapidly evolving market.
However, manufacturing businesses face significant challenges when pursuing M&A opportunities. Post-merger integration is the most frequently cited barrier (37%), followed by competition for attractive targets (35%), and identifying suitable targets (33%).
Securing financing remains another key hurdle for the manufacturing sector, with 31% of respondents citing access to funding as a primary concern. Other critical challenges include valuation and price negotiations (31%), navigating regulatory and legal hurdles (29%), and cultural alignment with acquisition targets (27%).
Overall for manufacturing businesses, 55% say that international trade or collaboration is a growing priority, and 22% state that it is a core focus and key part of their growth plans.
Harry Walker, corporate finance partner at Dow Schofield Watts, commented:
“The M&A landscape is evolving, and businesses are recognising that strategic acquisitions offer a powerful means of accelerating growth. With increased competition, rising valuations, and the complexities of post-merger integration, success requires a clear plan. Businesses that approach M&A with a well-defined strategy – balancing ambition with careful execution – are the ones best positioned to create long-term value.”
Beyond M&A, businesses are investing in multiple avenues to drive long-term success. Digital transformation (41%) is the most widely cited strategic priority, while improving customer experience (37%) and new product development (32%) are also high on the agenda. With businesses facing an uncertain economic landscape, many are balancing growth ambitions with strategic cost-cutting (29%) and efforts to strengthen supply chain resilience (25%).
Download the full UK Growth Census report here: https://dswcapital.com/uk-growth-census-2025/
