Industrials
Q1 2024 QUARTERLY REPORT
Industrial Summary & Outlook
M&A Trends
2024 is bringing a noteworthy revival to the industrial M&A sector. The prospect of easing inflation and potential interest rate cuts is fostering a conducive environment for transactions, driving companies to pursue strategic acquisitions in pivotal areas like artificial intelligence (AI), automation, and digital transformation. These acquisitions are critical for gaining competitive advantages as firms endeavor to maintain leadership in rapidly evolving markets.
While optimism prevails in the US, European markets are grappling with lingering uncertainty, potentially resulting in valuation gaps and affecting transaction volume. In response, CEOs are streamlining portfolios by divesting non-core assets and reallocating resources to high-growth areas. This strategic reshaping not only creates opportunities for increased M&A activity but also positions private equity firms to play a more active role in the market, leveraging creative financing structures as market challenges ease.
M&A activity in 2024 extends beyond technology acquisition. Electric vehicle technologies, cloud-based solutions, robotics, and AI integration are anticipated to drive significant deal flow as companies aim to enhance efficiency, productivity, and revenue streams. Concurrently, efforts to fortify supply chains and prioritize sustainability are paramount. Companies operating in the facility and site services, testing, inspection and certification, and value-added distribution sectors are among those expected to attract noteworthy investment activity as investors continue to seek to put their capital to work.
Overall, the industrial M&A landscape in 2024 promises dynamism and excitement, characterized by the pursuit of strategic capabilities, innovation, and sustainability. These trends reflect a strategic shift in the industry towards future-proofing operations and adapting to evolving market dynamics.
Industry Commentary
“As we progress through 2024, we're maintaining our focus on three priorities, disciplined pricing across each line of business, leveraging technology to permanently reduce our cost to serve our customers, and executing on our strategic investments in sustainability growth.”
– Jim Fish, Waste Management; President and CEO
“[W]hile we have fantastic organic growth opportunities, we're very excited to be able to strategically make acquisitions in markets that will continue to support and grow our TAM, like we have just done with Fusus.”
– Brittany Bagley, Axon; COO and CFO
“[H]igh-performance GPUs for AI data centers only represent 6% of leading-edge foundry logic wafer starts today. The full potential of technologies like AI cannot be unlocked without next-generation chips with better performance, power, and cost. The technology road map for Semiconductors is rich with possibilities and opportunities, but also incredibly complex”
– Gary Dickerson, Applied Materials; President and CEO
Industrial Insights
The Trend
Increased capital raising and heightened investor interest in lower -middle to middle market transactions are occurring in the Industrials M&A landscape. Despite persistent challenges stemming from high interest rates and lingering economic uncertainties, there is a discernible air of confidence prevailing in the market. This confidence is fueled by a substantial influx of capital into the industrial space, driven by private equity, where investors are increasingly eager to deploy funds into strategic acquisitions and investments aimed at driving growth and innovation.
Against the backdrop of economic headwinds, the lower-middle to middle market segment has emerged as a focal point for investment, with investors recognizing the inherent potential and value creation opportunities within the space. Investors aim to capitalize on attractive valuation multiples and to leverage their expertise and resources to drive operational enhancements and accelerate growth.
Within the engineering and construction (E&C) sector, there's a discernible uptick in activity specifically for firms specializing in infrastructure, engineering services, and intelligent transportation systems. Investors view these companies as well-positioned to capitalize on emerging opportunities and navigate the evolving market landscape effectively. Despite lingering risks, such as uncertainties surrounding interest rates and the potential for defaults in commercial real estate, investors remain undeterred in their pursuit of strategic opportunities. By leveraging their financial resources and operational expertise, investors are poised to unlock value and drive sustainable growth within their portfolio companies.
In summary, the industrial sector's M&A landscape in 2024 is characterized by a convergence of factors, including heightened capital availability, growing interest in lower -middle to middle market assets, and a steadfast commitment to value creation and growth. Despite ongoing economic challenges, investors remain bullish on the sector's long-term prospects and are actively seeking investment opportunities that offer attractive returns. As companies and investors navigate the complexities of the market, the industrial M&A landscape is poised for continued evolution and growth in the year ahead.
Key Economic Indicators
Price Index
Source: U.S. Bureau of Labor Statistics Source:
Total Construction Spending (Non-Residential)
Funds Effective Rate Total Construction Spending (Residential)
Industrial Public Trading Statistics
Harbor View’s Industrial Sub-Sectors
• Specialty Equipment & Devices
• Data Capture & Analysis
• Technology Enabled Solutions
• IIoT / Robotics
• Design & Engineering
• Environmental Solutions
• Testing, Inspection & Certification
• Facility & Site Services Source: PitchBook, Data as of 3/31/24
• Manufacturing
• Distribution / Logistics
• Installation & Construction
• Utilities & Telecommunications
Comparative Median EBITDA Multiples
Select Industrial Public Trading Statistics
INDUSTRIAL TECHNOLOGY
Note: Privately held companies typically trade at a discount to public companies; companies denoted with “*” have cash balances that outweigh the sum of their market
and
Source: PitchBook, Data as of 3/31/24
Select Industrial Public Trading Statistics
INDUSTRIAL SERVICES
Note: Privately held companies typically trade at a discount to public companies
Source: PitchBook, Data as of 3/31/24
Select Industrial Public Trading Statistics
TRADITIONAL INDUSTRIAL
Note: Privately held companies typically trade at a discount to public companies
Source: PitchBook, Data as of 3/31/24
Select Industrial Public Trading Statistics
CONGLOMERATES
Note: Privately held companies typically trade at a discount to public companies
Source: PitchBook, Data as of 3/31/24
Industrial M&A Summary
Recent Notable Transactions
Transaction Count by Sub-Sector
Note: Deal count represents transactions completed in the U.S. & Canada; historical values retrospectively adjusted per source
Source: PitchBook
Industrial M&A Transactions
INDUSTRIAL SERVICES
Industrial M&A Transactions
TRADITIONAL INDUSTRIAL
Industrial Financing Transactions
Source: PitchBook $60M MAR 2024
MAR 2024
MAR 2024 $115M MAR 2024
Recent Notable Financings Financing Activity
FEB 2024
FEB 2024
FEB 2024 $60M JAN 2024
FEB 2024
JAN 2024
Note: Historical values retrospectively adjusted per source
Select Industrial Venture Capital Activity
EARLY-STAGE VENTURE CAPITAL
LATE-STAGE VENTURE
Industrial Expertise
Broad & Deep Industrial Expertise
TECHNOLOGY
Industrial Recycling Provider
Acquired by
STRATEGIC BUYER
White Glove
Transportation & Logistics
Acquired by
FINANCIAL BUYER
Metal Processor
Acquired by
FINANCIAL BUYER
Property Management Provider
STRATEGIC ADVISORY
SERVICES
Aerospace Component Testing Provider
Acquired by
STRATEGIC BUYER
Telecommunications Infrastructure Provider
Acquired by
FINANCIAL BUYER
Fluid Dynamics
Designer & Engineer
Acquired by
FINANCIAL BUYER
Light Industrial Staffing Provider
Acquired by
FINANCIAL BUYER
Metal Fabricator
Acquired by
FINANCIAL BUYER
Solar Lighting Designer & Integrator
Acquired by
STRATEGIC BUYER
Note: Unless displayed with the Harbor View logo, the transactions documented were executed in previous roles
Wireless Tower Owner & Operator
Acquired by
STRATEGIC BUYER
Connect with Our Industrials Team
Building on his 27 years of Investment Banking and Private Equity experience, Nate leads Harbor View’s Industrials practice. In its role, the Industrials team advises clients in the Industrial Technology, Industrial Services, and Traditional Industrial sectors helping business owners navigate the company sale, acquisition, and capital raise processes. Nate Shepherd Managing
Data Capture & Analysis Provider
Acquired by
STRATEGIC BUYER
About Harbor View Advisors
Operating at the intersection of investment banking and consulting, we partner with inspiring companies and private equity firms to help them design and execute their strategies for growth or exit. With years of experience as investment bankers, management consultants, and operators, we help growing teams improve their opportunities for success. We provide Sell-side and Buy-side advisory to innovative companies, and specialize in five key industries: Industrials, B2B Technology & Services, FinTech, Financial Services, and Consumer.
The material in this report is for information purposes only and is not intended to be relied upon as financial, accounting, tax, legal or other professional advice. This report does not constitute and should not be construed as soliciting or offering any investment or other transaction, identifying securities for you to purchase or offer to purchase, or recommending the acquisition or disposition of any investment Harbor View Advisors does not guarantee the accuracy or reliability of any data provided from third party resources Although we endeavor to provide accurate information from third party sources, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future