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Wednesday, January 28, 2015

Mergers and Acquisitions in Manufacturing Automation 2014


In July of 2014 Mirus initiated its coverage of the Manufacturing Automation including PLM, ERP, SCM and System Integration sectors.   We have now updated this report exploring 2014 performance of major public Manufacturing Automation Software companies, related M&A transactions, and trends in the industry.  See Mergers and Acquisitions in Manufacturing Automation 2014

Overall, 2014 was a strong year for M&A in Manufacturing Automation Software.   2014 transactions were led by predominantly the same companies that were buyers in 2013, with application acquisitions dominating (75% of transactions); often driven by the move to the cloud.  At the same time we saw an uptick in services (17%) transactions as consolidation of System Integrators became a prevalent trend.

While off from 2013’s pace, 2014 Manufacturing Automation M&A volume remained well above recessionary levels across a broad range of applications, with all Manufacturing Automation Software sectors represented.

Manufacturing Automation Public Company Deal Volume

Q4 specifically was a bit light, but while acknowledging BNY Mellon’s position that “we are closer to the end than the beginning,” Mirus sees no reason why 2015 shouldn’t be on par with 2014 in terms of transaction volume in the Manufacturing Automation space.  Stock markets are still up, cash is plentiful and despite a dip from 2013, mid-market and software M&A is strong.    Major MA leaders are placing bets on evolving technologies and trying to re-establish growth with the notion that one or more may be the next wave of the future.  Often these thought leading technologies are transacting at significant premiums, highlighting the scarcity value of truly unique, differentiated technology, and domain expertise.

With a healthy appetite for acquisitions, combined with increasing scarcity of quality targets (in fact we are seeing companies with rare domain expertise transact at significant multiple), Mirus believes owners should be considering this time as ripe for exit.  For more information on this topic feel free to drop me a line at boes@merger.com or watch this space.

 

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