South Yorkshire has undergone a quiet but significant transformation over the past decade. From advanced manufacturing and clean energy to digital and life sciences, the region has built real momentum. Yet as economic uncertainty lingers and capital becomes more selective, an important question emerges:

How strong is the investment temperature in South Yorkshire right now?

Rather than speculate, we asked three leaders who see the market from very different vantage points:

• ‍Ian Whitworth, Investment Manager at Mercia Asset Management and responsible for the deployment of Northern Powerhouse Loan & Equity Funding across the Sheffield City Region

• John Whitney, Senior Investment Manager at Foresight Group and representing their South Yorkshire investment fund that is actively deploying capital in the region

• ‍Andrew Ryder, Corporate Finance Partner at Shorts Chartered Accountants - one of the most prolific dealmakers operating across South Yorkshire

Each brings a distinct perspective on capital, confidence and what is really happening on the ground.

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From a Northern Powerhouse perspective, how would you describe the current investment temperature in South Yorkshire?

Insights from Ian Whitworth

Something is stirring in Sheffield. Walking through the city centre recently with the Snooker World Championships in full swing, the signs were all around – buildings under renovation, new developments rising up, more people coming into the city and a distinct buzz on the streets.

The transformation has been a long time coming but we are starting to see the difference. The two universities have been central to this renaissance, producing skilled graduates, developing new technologies and spin-out businesses. According to the British Business Bank. Sheffield is now one of the leading start-up capitals of Britain.

There are indications that the green shoots are spreading, building on current developments such as the  Advanced Manufacturing Research Centre in Rotherham, Sheffield’s Advanced Wellbeing Research Centre and Barnsley’s Digital Media Centre, all further evidence of the power of commerce and academia coming together.

Investment has been critical to this success and the region’s investors and advisors have all played their part, while the Northern Powerhouse Investment Fund (NPIF) has had a key role in plugging the funding gaps - supporting tech companies that may not otherwise have got off the ground and established firms struggling to find funds for expansion.

NPIF equity funding from Mercia has nurtured world-class start-ups such as SCI Semiconductor, which is helping to build the UK’s domestic chip industry, and Sitehop, which has found a novel way to secure telecoms networks.

Meanwhile NPIF loans we provided have helped to kickstart Exciting Instruments, whose device is revolutionising medical research and establish the pioneering STEPS rehabilitation centre, as well as supporting firms in more traditional sectors. Recent deals have included Sheffield-based EKSPAN, the North’s leading bridge engineering specialist; Doncaster-based MRC Engineering, which designs telecoms for the rail network, and Rotherham’s MWAY Comms, a civil engineering firm helping to improve road safety.

With the current uncertainty created by the war in Iran, demand for funding has been more subdued. Some businesses are adapting their plans or choosing to ‘wait and see’ but we urge them to use this time to consider their future funding options. Our NPIF debt team work closely with the banks and are often able to help where businesses can’t ‘tick the right boxes’ for other lenders.

With so many promising businesses and ambitious management teams, we are optimistic about the region’s future. There is certainly plenty to look forward to – not least the reopening of Doncaster airport and another 20 years of snooker championships.

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The launch of £40m of dedicated equity and debt funding for South Yorkshire was a significant vote of confidence in the region. What have you learned about the strength of the SME market since deployment began, and where do you believe the next wave of growth will come from?

Insights from John Whitney

Since the launch of the South Yorkshire Growth Equity Fund, one theme has come through clearly: the SME market is far more resilient, ambitious and investable than headline economic narratives suggest. South Yorkshire has been consistent with Foresight Group’s experience of investing in growing SMEs across the UK & Ireland, which is that regional SMEs tend to be under capitalised rather than under performing.

Across South Yorkshire we are regularly meeting founder led businesses that have adapted quickly to inflation, shifting and often disrupted supply chains, variable interest rates and a string of other macroeconomic and geopolitical headwinds. Many of the businesses that we meet in the region have strong fundamentals including sticky revenue streams, loyal customers and experienced management teams - but are looking for the capital and a supportive local partner with the expertise to professionalise and scale their businesses, and to help steer them through succession planning. The strongest opportunities we see share common traits: a clear value proposition, credible growth plans and a willingness to bring in external support to drive the growth agenda.

We’ve backed several businesses across South Yorkshire to date through Foresight’s regional buy-out and VCT funds, including Phlux Technology, a high tech university spinout, Martek Marine, an international value-add distributor of critical safety equipment to the marine sector, and M R Machine Knives, a locally-based manufacturer that is a global leader in industrial machine knives manufacturing. More recently we invested in Alan Wood and Partners, one of the UK’s largest privately owned multi-disciplinary engineering design, building and project management consultancies. In each case, those companies were drawn to Foresight’s strong regional focus, relationship-led approach and track record in supporting businesses through multiple economic cycles.

Looking ahead, we believe the next wave of growth will come from three overlapping areas. First, productivity enhancing sectors - including advanced manufacturing, industrial services, business critical software and data driven services — where SMEs are helping customers do more with less. South Yorkshire SMEs are well-placed to drive growth in these areas, drawing on a well-established history of being a region where people make things, get things done and do more with less. Secondly, we expect growth to come from those businesses that are either directly responding to, or enabling others to respond to, the opportunities presented by decarbonisation, energy efficiency and regulatory change. Finally, we see succession driven growth driving economic activity in the region as founders open up to inward capital investment to support succession plans, driving the evolution of management teams that will be led by the next generation looking to deliver organic or acquisition led growth strategies.

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As one of the most active dealmakers in the region, are deals getting done in South Yorkshire and how competitive is the market?

Insights from Andrew Ryder

Despite being a pretty successful one for Shorts as Corporate Finance advisors, the last 12 months has been an interesting, and in some ways contradictory, year. Little has felt stable or consistent in the deal market throughout the year, perhaps an inevitable reflection of the macroeconomic environment.

Our pipeline of deals has ebbed and flowed throughout the year more than I have experienced in my career; from feeling like nothing much is happening in the market to periods where the phone rings with new opportunities several times a day. This is reflected in the speed of decision making on deals themselves. Deals have absolutely been getting done, but often they have taken a long time to gather momentum and have proceeded to be stop start and a lengthy process to completion as buyers or sellers seek additional reassurance. However, we have also had a small number of deals where, despite anticipated challenges, the purchaser has pushed through in a quick timeframe, which is very much against the norm, but reflective of a strategic buyer.

The other key reflection I would say, is that creative solutions and a wide variety of deal types has been very much to the fore in enabling deals to happen in a less certain environment.

In the last 12 months, we have sold businesses to UK acquirers, overseas listed companies, advised on Management Buy Outs and Employee Ownership Trusts as well as acting for acquisitive companies buying in the UK and in Europe. These transactions have had a wide range of structures to achieve a solution that matches buyers,’ sellers’ and funders’ appetite for risk against an uncertain backdrop. So, more than ever, we are seeing creative deal structures including share retention, deferred consideration, earn outs, warranty and indemnity insurance and so on.

A wide range of solutions and deal types, but the deals are getting done and the overall market competitiveness is, more than ever, very much industry and company specific. The right company for sale in the right sector results in a competitive process, with advisors using aggressive auction type processes to drive competitive tension and get the best deal for their clients. However, the market can currently also be tough if you are looking to exit a company in the ‘wrong’ sector with characteristics the market has concerns around. My observation is that these variations have seemed to be more amplified than in recent years.

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The Leadership Angle

South Yorkshire’s investment story is increasingly becoming a leadership story. Across the region, ambitious founders, experienced management teams and collaborative institutions are helping to drive growth despite ongoing economic uncertainty. The perspectives shared by investors and dealmakers highlight a common theme: the businesses attracting capital are those with strong leadership, clear vision and the ability to adapt. From scaling advanced manufacturing firms to supporting succession planning and innovation-led growth, leadership remains one of the defining factors shaping the region’s next chapter.

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Gillian McBride - Partner

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