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Mirus Capital Advisors, Mergers and Acquisitions, Industrial, Industrial Manufacturing

Looking ahead at manufacturing M&A activity

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The news from the manufacturing sector over the past few months has been mixed.  Many firms are experiencing headwinds from the strong US dollar.  The most recent ISM PMI results have been at 51.5, the lowest level of the past couple of years.  Recent PwC research suggests that the share of US M&A in the industrial manufacturing sector declined to its lowest levels in a decade as the energy sector dropped off from a robust early 2014.

According to recent M&A Magazine research, dealmakers continue to forecast that M&A in the manufacturing sector will expand, but that the pace of growth will slow.  The survey gave the sector a 3-month (near-term) score of 79.3, but the 12-month score dipped to 68.1. While still healthy, the survey rankings have dropped significantly over the last year. In early 2014, survey respondents gave manufacturing a 12-month score of 81.8 vs today’s 12-month view of 68.1.  Looking forward to 2016, the sentiment is notably negative on deal multiples in 2016.

For companies considering selling in the near-to-mid term, the sentiment appears strongly in favor of transacting now vs waiting one or more years.


Alan Fullerton is a partner with Mirus Capital Advisors. He works with owners of middle-market businesses and can be reached at fullerton@merger.com.