Automation mergers, acquisitions, capital markets analysis: October 2022
The Bundy Group reported eight automation transactions in the month of October. Analysis on the acquisitions and reports are highlighted below.
Bundy Group, an investment bank and advisory firm, provides an update on mergers & acquisitions and capital placement activity in the automation market. Eight transactions were reported for the month of October.
With great uncertainty in the global economy today, there is a common question I am on the receiving end of from business owners: “What impact is this economy having on the mergers & acquisitions market and the value of my business?” My response to owners is often broken into two parts: A) the effect on the overall automation market B) the effect at the individual company level.
Automation market: While numerous industries are experiencing difficulties due to economic challenges, the Bundy Group team sees no signs of slowing automation market growth over the next few years. In a June 2022 report, HFS pointed out that “COVID-19 was a wake-up call for firms that had not yet implemented Industry 4.0” solutions. In addition, HFS added that these automation solutions “emerged as a key driver in helping companies survive the pandemic.” To further this market validation, Fortune Business Insights indicated in a March 2022 report that the global industrial automation market is projected to increase from $205 billion in 2022 to $395 billion by 2029.
Bundy Group maintains continual discussions with automation companies of many types, including system integrators, consulting firms, software providers, and manufacturers. Nearly all of these owners and executives indicate that their end-user clients are demanding automation solutions as much as ever. In addition, the pace of phone calls to our organization from strategic and financial sponsor buyers seeking acquisitions and investments in the automation market has not slowed over the past year. In comparison, the key public equity market indexes have experienced an investor pullback with “the Dow, S&P and Nasdaq” decreasing by “21, 25 and 33% year-to-date, respectively.”
Company-specific: While residing in the attractive automation industry is a huge asset for a company, the individual fundamentals of an organization are critical for demonstrating value. When Bundy Group provides insights to owners on company valuation ranges before we are engaged to sell a firm or assist in raising capital, we assess numerous features (example – profit margins, stickiness of client relationships, management team, etc….) For instance, if an automation company continues to realize growth and profitability, or it generates new client contracts, in today’s an uncertain environment, then it could be argued that a firm’s value has gone up.
Jim Beretta, president of Customer Attraction, a boutique marketing consultancy with a focus on robotics, automation and advance manufacturing, offered insights on how individual company dynamics are a major driver of business value for an organization. Beretta stated, “Even in this uncertain economic environment, companies are still seeking growth by acquisition in the automation sector.”
He further added that “seasoned buyers put a great deal of emphasis on attributes such as resilient end-user industries, attractive geographies, and differentiated capabilities when evaluating acquisition opportunities. If an Industry 4.0 solutions provider can demonstrate that it has strong clients, industries, contracts, expertise, etc… then it could demand a premium value in this buyer-rich automation mergers & acquisitions market.”
In summary, Bundy Group continues to monitor the performance of the automation market as well as individual organizations within this attractive segment. While no business or industry is completely immune to economic downswings, most performance indicators for the automation market and firms within this industry continue to be positive. The owner of an automation solutions firm should stay attuned to market trends, as well as his or her own firm’s appeal to the mergers & acquisitions market, as these are major determinants of a company’s valuation.
October 2022 automation transactions
Dorsett Controls, an industrial technology company and industry leader that manufactures advanced supervisory control and data acquisition (SCADA) systems software and hardware, has acquired Sunapsys, a Virginia-based system integrator who specializes in the design and implementation of controls and information systems in the water and wastewater market for municipalities, manufacturers, and OEMs. Learn more.
Kaho Partners, an independent sponsor, has formed Addtronics, a holding company dedicated to acquiring, empowering, and growing robotic automation solution providers. Kaho also announced that Addtronics has acquired Dynamic Design Solutions, a custom robotic automation systems provider based in the eastern U.S. Learn more.
T.I.E. Industrial, a portfolio company of Summit Park and a leading aftermarket supplier of CNC parts, refurbished industrial robots and general automation repair, has acquired Robots.com and the RobotWorx name. Learn more.
Pamlico Capital announced that it has made a strategic growth investment in InRule Technology, an intelligence automation company providing integrated decisioning, machine learning and process automation software to the enterprise. Learn more.
Unifonic, a leading Communications Platform as a Service (CPaaS) provider in the Middle East, announced today the acquisition of Sestek, an R&D-focused AI-powered conversational automation company. Learn more.
Tri-State Equipment Company, Inc., a St. Louis-based manufacturer of overhead cranes, ergonomic part manipulators, and fall protection systems has acquired EMS Automation & Service, a Hanna City, Ill.-based business specializing in robotic integration for material handling, welding, cutting and machine tending applications. Learn more.
Newterra, a portfolio company of Frontenac, acquired H2O Engineering Inc., a California-based supplier that specializes in tailored water treatment solutions to meet the specific needs of its clients. Founded in 2000, H20 Engineering delivers solutions across several markets, including indoor agriculture, light industrial, remediation, food and beverage and water reuse. Learn more.
Leadec, a global service specialist for factories, has acquired Elmleigh Electrical Systems Limited, a process automation specialist and systems integrator for blue chip customers, including some of the largest operators in the food and beverage and parcel distribution sectors throughout the UK and Europe. Learn more.
Bundy Group is a boutique investment bank that specializes in representing controls and automation, Internet of Things, and cybersecurity companies in business sales, capital raises, and acquisitions. Over the past 33 years, Bundy Group has advised and closed on over 250 transactions, which includes numerous automation-related transactions. You can learn more at www.bundygroup.com or by contacting Clint Bundy.