BDO: supply chain resilience key for M&A in manufacturing
M&A trends in manufacturing
Within the report details that as a result of the supply chain vulnerabilities exposed following the pandemic and BREXIT, there is likely to be an increased appetite for deals that allows organisations to onshore, re-shore or near-shore supply.
Other driving forces identified include corporations expecting to reposition themselves by making strategic acquisitions that diversify their markets and technologies, as well as the impact 2020 has had on sub-sectors that are ready for consolidation.
“Deal activity held up remarkably well in 2020, and the market looks set to remain active in 2021. Many corporates have significant cash reserves to invest and private equity firms sitting on considerable stores of dry powder are competing to acquire quality manufacturing businesses that have proven their resilience over the last year,” commented , UK Industrials Mergers & Acquisitions Partner at BDO.
Interests in M&A activity in manufacturing was resilient in 2020, with almost 600 deals completed. Whilst a 13% decrease compared to 2019, BDO attributes the decline to the Q2 lockdown where deals dropped by 55% compared to Q1. M&A activity did however increase by 45% in Q3 and 91% in Q4.
During 2020, engineering remained the most active sub-sector, accounting for 26% of deals, followed by food and drink (13%), building products (12%) and life science (12%), which was the fastest growing sub-sector with deal volumes rising 68%.
“After the challenges of 2020, it’s unsurprising that many manufacturers are reviewing their supply base and we anticipate market movement as operators take steps to reshape supply chains. The pandemic has also focused minds on how markets will develop over the longer term, with corporates positioning themselves for a different future in which digitalisation, automation, sustainability and ESG appear higher on the agenda,” added Buckley.
Four Factory of the Future Market Trends to Keep an Eye on
Global Smart Manufacturing Market
Attributed to the rapid growth in the adoption of automated systems in industrial processes, the is predicted to grow from US$$175bn (2020) to US$303bn by 2026 with a compound annual growth rate (CAGR) of 6.4% between 2019 and 2026.
While COVID-19 has somewhat slowed down the market’s growth, it is expected that by the second to third quarter of 2023 there will be a ‘considerable’ rise in growth for the market.
Key players in the industry: Schneider Electric, General Electric, Siemens, Honeywell International Inc., Rockwell Automation Inc., FANUC Corporation, and Emerson Electric Co.
Industrial Automation Market
Making people’s lives easier, and their work more accurate and effective, the global demand for automated technologies such as robotics - especially in science and technology - is driving its increase in global market value.
Key players in the industry: ABB, Siemens, General Electric, Schneider, Endress+Hauser, Yokogawa, Honeywell, WIKA, Azbil, Fuji Electric, 3D Systems, and HP.
Smart Factory Market
Expected to grow from US$80.1bn (2021) to US$134.9bn by 2026, the - with a CAGR of 11% between 2021 and 2026 - is experiencing growth driven by fiscal policies adopted to keep manufacturing facilities afloat during COVID-19.
Other driving factors include resource optimisation, cost reduction in production operations, increased demand for industrial robotics, rising demand for technologies, and the growing significance of energy efficiency.
Key players in the industry: Emerson Electric Co., General Electric, Rockwell Automation, Inc., Schneider Electric SE, ABB Ltd., Siemens AG, Mitsubishi Electric Corp., Honeywell International Inc., Endress+Hauser AG, and Yokogawa Electric Corp.
Artificial Intelligence (AI) in Manufacturing Market
“It is undeniable that the manufacturing industry is at the forefront of artificial intelligence implementation,” says . “Manufacturers are using AI-powered analytics to increase performance, product quality, and employee protection, from substantial reductions in unplanned downtime to better crafted goods.”