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Introducing Manufacturing Automation Coverage for Mergers and Acquisitions

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Over the past couple of years Mirus has been following the product lifecycle management (PLM)  industry (see our most recent report) and its activity in mergers and acquisitions. Subsequently, due to the outstanding reception of our thoughts surrounding PLM, we have decided to broaden our regular editorial coverage to include all of the manufacturing automation (MA) software industry and its supporting services. With a plethora of data available today, it is our goal to provide followers with enlightening qualitative, as well as quantitative analyses, of this industry that will help you track M&A activity, and develop your own strategic buy or sell side transaction plans. It is our intention to update the quantitative information surrounding the industry roughly every six months and supplement that with regular, in-depth qualitative reports on topical items within the various industry sub-segments as needed.

Mirus has defined the manufacturing automation software industry as software and supporting services that are applied to help companies improve their operational efficiency in the design and manufacture of their discrete or process driven products. As such, Mirus has defined four, often overlapping, sub-sectors to manufacturing automation:

1) Product Lifecycle Management (PLM) including CAD, CAM, CAE, EDA, PDM, Plant Design and their different permutations.

2) Enterprise Resource Planning (ERP) and all that means; From BOM, to shop floor control, distribution and the various accounting and even HR systems in between.

3) Supply Chain Management. Design, planning, execution, control, and monitoring of sourced designs, materials and components.

4) System Integration. The strategic planning and supporting implementation services, often outsourced by software vendors that make it all come together on site.

Over the course of the past year, tracked companies made approximately 90 related acquisitions, with three sectors averaging over 2.5 transactions per company. SCM companies, despite their higher multiples and superior growth, actually lagged other sectors averaging just over one per company. This would be indicative of a sector which is growing organically and has yet to engage in decisive M&A strategies.

acquisitions per major company

Having said this, when we look a little deeper, 6 of 35 tracked companies (Accenture, Autodesk, Dassault, Oracle, SAP, and Siemens) accounted for approx. half of the 90 tracked transactions in the past year.  These companies clearly have aggressive acquisition strategies; however this has not yet necessarily translated into growth, with these 6 companies averaging just over .75% growth over the prior 4 reporting quarters.   Will this translate to future growth, or was M&A a strategy just to maintain growth?  Time will tell, but what we do know is these companies are at the forefront of acquisitions and any company looking toward selling over the next few years would do well to develop partnership relationships with these companies to the degree that it makes business sense.

For a more in-depth look at Mergers and Acquisitions in Manufacturing Automation including Mirus’ Manufacturing Automation Stock index, its impact on M&A, trends in consolidation and Mirus’ look at the short term M&A future, please download our inaugural report on Mergers and Acquisitions in Manufacturing Automation.