Welsh companies remain highly attractive mergers and acquisitions targets, with 22 major acquisitions of businesses based in Wales in 2016/17 compared to 26 in the previous 12 months, according to law firm Hugh James.

Hugh James says that although the number of business acquisitions in Wales has dipped, this is a slower rate of decline than in the UK as a whole.

Acquisitions of UK businesses dropped to 863 last year from 1,173 the year before – down 26 per cent, compared to 15 per cent in Wales.

Hugh James reports seeing its busiest 18 months advising on Welsh M&A activity since the financial crisis.

Appetite for Welsh companies has remained comparatively resilient because Wales has particular strengths in innovative, high growth market segments such as advanced manufacturing, defence electronics and alternative energy.

These have remained highly popular targets for bigger companies. Many of the Welsh acquisition targets operate in these areas.

Demand for M&A opportunities in these sectors tends to remain strong despite wider political and economic factors such as uncertainty over Brexit, which may be having a dampening effect on activity in the broad-base of UK industries as a whole.

Examples of Welsh businesses acquired in the last year include:

• Dragons Rugby, the regional rugby union team for the Gwent regions, which was acquired by the Welsh Rugby Union

• Mid Glamorgan-based manufacturer of military aviation equipment Aircraft Maintenance Support Services Ltd, acquired by global technology solutions provider JBT Corporation

Gerallt Jones, partner at Hugh James said: “Wales’ strength in exciting fast-growth markets and proprietary technology provides a rich source of plum acquisition targets attracting global buyers.

“From our experience, this is proving to be one of the busiest periods we’ve ever seen for M&A activity.

“Demand for high quality businesses in areas like advanced manufacturing, electronics, defence and renewable energy is less likely to be buffeted by the headwinds of Brexit or wider economic conditions which may affect sentiment in the UK as a whole.

“Any immediate concerns over the Brexit vote have given way to a real impetus to get on with deals, in the knowledge that negotiations with the EU are going to take some time. Business owners who rode out the recession waiting until valuations improved, see now as a good time to sell.

“There is also significant financial firepower available from banks under increasing pressure to lend more to businesses, and from private equity investors with plenty of capital to deploy.”