Scotland is well known for its proud heritage of manufacturing. One of the main engines behind Britain's industrial revolution in the 1800s and, until the beginnings of deindustrialisation in the 1960s, it remained a powerhouse of British manufacturing, with products made on the Clydeside, and beyond, shipped around the world. Many thought the sector had had its day – in the 1990s manufacturing jobs in Glasgow dropped to below a quarter of its 1952 level.

That prognosis has turned out to be premature. With renewed political will and a bedrock of solid skills, academic excellence, and a tradition of engineering expertise, Scottish manufacturing appears to be going through a period of renaissance. About this time last year, to take one example, the Scottish Government announced plans to launch a manufacturing centre of excellence, aimed at brokering collaboration between industry and academia, boosting competitiveness and improving productivity.

The evidence of this resurgence is also apparent in our third US/UK M&A Deal Monitor, which looks at deal activity going in both directions across the Atlantic. It found that, despite the shocks provided by political events over the course of the last two years, US-Scottish M&A remained resilient, with a total of 40 deals concluded – 28 involving US acquirers in Scotland (16 in 2015 and 12 in 2016) and 12 Scottish businesses purchasing assets across the pond (seven and five).

This meant that, of the UK regions, excluding London and South East England, Scotland placed third for US outbound M&A, behind the East (57) and North West (33) of England. A good proportion of these were in manufacturing: the sector, along with technology, media, and telecommunications (TMT) companies, represented eight US outbound deals and three UK outbound acquisitions each.

Given all that has happened in the last year, the number of transactions may surprise some people. The amount of activity in the manufacturing sector may surprise them even more – but it shouldn't. The availability of good Scottish businesses is driving activity in the sector, regardless of outside factors.

Of course, TMT also did well, with exactly the same number of deals. Its emergence as a force in the Scottish economy has been almost unparalleled, with well-known names, such as Skyscanner and Fanduel, leading the way. The sector's strength was highlighted last year by Facebook's acquisition of Edinburgh-based immersive audio company, Two Big Ears. If the world's largest social media network is looking to Scottish companies for growth, it suggests the sector is doing well enough...

Back to Scotland's more traditional industries and another standout deal from the past year was undoubtedly the £285-million purchase of BenRiach Distillery Company by Brown-Forman, producer of Jack Daniel's whisky. This transaction helped Scotland more than double its total investment from US companies to £4.8 billion, compared with £2 billion in the ten quarters up to Q4 2015 – further evidence of the strength of dealmaking in the US/UK deal corridor.

At the UK level, the picture was robust in the face of headwinds. Our report identified that US outbound deals to the UK rose 3.6% in the last six months, while UK outbound deals to the US fell by 20.4%. It also found that the final quarter of 2016 saw UK outbound M&A leap to $86.4 billion in value, ensuring the US/UK deal corridor performed roughly in line with the global trend for M&A. 

Two further trends stand out from this: the strength of US outbound dealmaking and the sharp fall in UK outbound dealmaking. Widespread expectations of a collapse in US outbound dealmaking following the UK's vote to leave the EU has not come to pass and, on the contrary, US buying of UK assets has outperformed the previous six months.

What's clear is that companies everywhere are being tested on their ability to deal with technology convergence, and if you have a technology need in your product lines, then today there is a great opportunity to go out and find a company that can solve that. If they aren't investing in those solutions organically, then they have to buy those solutions – and quickly. This is going to create a lot of future dealmaking, as is the desire for increased revenue in a low economic growth environment.

The quest for growth continues in these challenging times, and M&A remains the best way of achieving it.

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