Industrial M&A Trends: Navigating Low Growth, Policy Uncertainty and Shifting Deal Dynamics

In this short video, Dr. Burkhard Weber, Partner at IMAP Germany speaks with Claire Smedley from IMAP HQ about the key challenges and opportunities shaping current industrial M&A trends.

Low Growth and Policy Uncertainty: The Core Challenges for Industrial M&A

The main challenge for industrial companies all over the world is the low growth environment driven by the unpredictability of political decisions and the current investment climate. The effect is clear: If companies don’t buy hardware or invest, industrial services and manufacturing firms have less to do.

Dealmaking Dynamics: Adjusting to Changing Seller Price Expectations

In this complex environment, dealmaking has become tougher. There are fewer industrial M&A deals available, largely because sellers believe buyers will not pay a fair price. This mismatch in seller price expectation in M&A has led to more rescue transactions, where opportunistic investors acquire struggling businesses - a key feature of today’s industrial M&A challenges.

Valuation Pressures

Naturally, M&A valuation multiples have fallen. What used to be six to eight times EBITDA is now four to five times EBITDA. Even in sectors such as Medical Technology and Automation which were selling at ten times EBITDA or higher a couple of years ago, multiples have come down.

Emerging Bright Spots in Industrial Sector

However, there are still some sectors thriving in low growth M&A environment, such as Medical Technology and Precision Controls, Measurement, and Infrastructure products. Indeed, Infrastructure products could be considered a megatrend, meaning that firms in these markets are still highly sought-after despite the challenges facing broader industrial M&A activity.

Watch the video HERE for full details.