Plant engineering, manufacturing M&A: February 2023
The Bundy Group reported five transactions in the month of February. Analysis on the acquisitions and reports are highlighted below.
Bundy Group, an investment bank and advisory firm, provides an update on mergers & acquisitions and capital placement activity in the automation market.
With great uncertainty in the global economy today, there is a common question I am on the receiving end of from business owners in the industrial technology and automation sectors: “What impact is this economy having on the mergers & acquisitions market and the value of my business?” My response to owners is often broken into two parts: A) the effect on the overall automation and industrial technology markets B) the effect at the individual company level.
Automation market: While numerous industries are experiencing difficulties due to economic challenges, the Bundy Group team sees no signs of slowing industrial technology market growth over the next few years. In a June 2022 report, HFS pointed out that “COVID-19 was a wake-up call for firms that had not yet implemented Industry 4.0” solutions. In addition, HFS added that these industrial technology solutions “emerged as a key driver in helping companies survive the pandemic.” To further this market validation, Fortune Business Insights indicated in a March 2022 report that the global industrial automation market is projected to increase from $205 billion in 2022 to $395 billion by 2029.
Bundy Group maintains continual discussions with industrial technology companies of many types, including system integrators, consulting firms, software providers, and manufacturers. Nearly all of these owners and executives indicate that their industrial end-user clients are demanding industrial technology solutions as much as ever for the plant floor and its equipment + systems. In addition, the pace of phone calls to our organization from strategic and financial sponsor buyers seeking acquisitions and investments in the industrial technology market has not slowed over the past year. In comparison, the key public equity market indexes have experienced an investor pullback with “the Dow, S&P and Nasdaq” decreasing by “21%, 25% and 33% year-to-date, respectively.”
Company-specific: While residing in the attractive industrial technology industry is a huge asset for a company, the individual fundamentals of an organization are critical for demonstrating value. When Bundy Group provides insights to owners on company valuation ranges before we are engaged to sell a firm or assist in raising capital, we assess numerous features (example – profit margins, stickiness of client relationships, management team, etc….) For instance, if an industrial technology company continues to realize growth and profitability, or it generates new client contracts, in today’s an uncertain environment, then it could be argued that a firm’s value has gone up!
Jim Beretta, president of Customer Attraction, a boutique marketing consultancy with a focus on robotics, automation and advance manufacturing, offered insights on how individual company dynamics are a major driver of business value for an organization. Beretta said, “Even in this uncertain economic environment, companies are still seeking growth by acquisition in the automation sector.” He further adds that “seasoned buyers put a great deal of emphasis on attributes such as resilient end-user industries, attractive geographies, and differentiated capabilities when evaluating acquisition opportunities. If an Industry 4.0 solutions provider can demonstrate that it has strong clients, industries, contracts, expertise, etc… then it could demand a premium value in this buyer-rich automation mergers & acquisitions market.”
In summary, Bundy Group continues to monitor the performance of the automation market as well as individual organizations within this attractive segment. While no business or industry is completely immune to economic downswings, most performance indicators for the industrial technology market and firms within this industry continue to be positive. The owner of an industrial technology solutions firm should stay attuned to market trends, as well as his or her own firm’s appeal to the mergers & acquisitions market, as these are major determinants of a company’s valuation.
February 2023 mergers and acquisitions
Italia Technology Alliance (ITA Holding) continues its strategic development and welcomes Taiprora S.r.l. into its social structure, a consolidated Abruzzo-based company that has been creating software and automation systems for production and logistics for 30 years. Learn more.
Addtronics, LLC (“Addtronics”), a mission-driven holding company dedicated to acquiring, empowering, and growing leading robotic automation solution providers, has acquired Missouri Tooling & Automation, LLC. (“MTA”). MTA is a leading custom robotic automation systems provider based in Lebanon, Missouri. Learn more.
Galco Industrial Electronics, Inc. (Galco) has acquired Zesco, Inc., a regional automation solutions provider located in Brecksville, Ohio. “The acquisition of Zesco further positions Galco as a global leader in the industrial automation and motion control industry,” said Allison Sabia, president and CEO of Galco. Learn more.
Built Robotics, the inventor of the robotic Exosystem and leader in construction autonomy, acquired Roin Technologies, the makers of the first automated concrete power trowel. The acquisition will grow the capabilities of Built’s engineering team and accelerate key technological developments. Learn more.
IPS, a North American leader in single-source solutions for industrial and commercial power and mechanical processes, has acquired Evans Enterprises, Inc (Evans). The sale includes all eight Evans locations, servicing customers across the South and Central United States. For IPS, these additional locations add services to underserved markets and further enhance its industry-leading network of 64 locations. Learn more.
– Bundy Group is a CFE Media and Technology content partner.