Industrial M&A facing a slow and steady recovery

The Industrial sector has faced headwinds in recent years, with M&A activity declining amid supply chain disruptions, geopolitical tensions, and inflationary pressures. However, there are signs of a recovery emerging, with dealmaking on the rise in the second quarter of 2024, according to our global M&A Energy, Utilities, Materials and Industrials (EUMI) report. 

Ansarada Deal Platform data suggests growth in the sector dropped 23% in the second quarter of the 2024 calendar year, continuing the downward trend observed over the 12 months ending 30 July 2024 (-7%).

But much like in other parts of the EUMI sector, green shoots appear to be tentatively emerging. Activity in Q2 2024 was up 9% compared to the previous corresponding period, suggesting deal activity may be climbing into the next year.

Lingering COVID effects and supply chain woes

Insights uncovered in the report indicated the Industrial sector continues to grapple with the lingering effects of the COVID-19 pandemic. Heightened geopolitical tensions and trade conflicts have also created additional challenges for businesses, including higher shipping rates and less secure trade routes.

Companies that can effectively manage these risks and mitigate their impact will be better positioned to succeed in the current environment.

What are the current opportunities in Industrials M&A?

Focus on efficiency and digital transformations: As companies navigate the post-pandemic landscape, they are prioritizing efficiency and digital transformation. M&A can be a powerful tool for achieving these goals. By acquiring companies with complementary capabilities or advanced technologies, businesses can enhance their operations, reduce costs, and improve their competitiveness.

The focus on margins and profitability: Industrials companies are prioritizing three key macroeconomic trends: supply chain constraints, cost effectiveness, and margins and profitability. These factors are driving M&A activity as companies seek to improve their operations and strengthen their financial positions.

A cautiously optimistic outlook

While the Industrial sector faces challenges, there are also opportunities for growth and innovation. M&A can play a crucial role in helping businesses navigate these challenges and capitalize on emerging trends. As the economic landscape continues to evolve, companies that can adapt and embrace change will be well-positioned to thrive in the Industrial sector.

Remember: This is just one piece of the puzzle. Our M&A EUMI Outlook Report explores trends across all four industries. For a more comprehensive view, be sure to download a copy of the report.