Automation mergers, acquisitions, capital markets analysis: September 2022
The Bundy Group reported 11 automation transactions in the month of September. 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. Eleven transactions were reported for the month of September.
After a busy year in the automation sector, I wanted to provide observations on activities and trends occurring in this rapidly evolving industry. The foundation for my feedback includes:
Current Bundy Group client engagements in which our team is advising automation businesses in sales and capital raises.
The numerous conversations I have each week with owners, executives, strategic buyers, financial sponsors (i.e. private equity groups and family offices) and other industry professionals.
Bundy Group’s attendance at, and involvement with, such conferences as Control System Integrators Association, Automate and the International Manufacturing Technology Show.
Continual tracking of Mergers & Acquisitions and capital placement activity in the automation market (see prior articles linked below).
Five automation market observations
1. Overabundance of buyers in the automation sector: Consolidation and investment in the automation sector continue at a torrid pace. Furthermore, the “secret is out” about this attractive market, which is luring these buyers of all types. The result is that there is significantly more buyer demand than supply of available acquisition opportunities in the automation sector.
2. Valuation multiples hold strong: While buyers are in the business of acquiring solid companies at low valuations, they can pay… and are paying… seller-friendly valuation multiples. That being said, buyers only pay high multiples when they are forced to do so under the threat of competitive pressure. As an example, in a 2021 Bundy Group automation transaction, we kicked a strategic buyer out of our managed process three times. Ultimately, the buyer came back with “hat in hand” and presented a transaction-winning offer for our client’s business.
3. International buyer interest: While the automation sector has no shortage of quality domestic buyers, a pool of legitimate international buyers has developed. These buyers are aggressively trying to build an automation presence in the U.S. Examples of active international buyers include Actemium, SCIO Automation, and Axel Johnson International.
4. Cybersecurity is a growth area: Whether it be systems integrators, technology platforms or manufacturers, providers understand the market demand to incorporate cybersecurity solutions in conjunction with their automation offerings. Furthermore, because the cybersecurity sector is a massively growing market, an automation firm that can also deliver cybersecurity solutions can expect to see a positive impact on its valuation.
5. Marriage of material handling and automation: With the pandemic supercharging the e-commerce and logistics segments, demand heightened from shipping companies, terminal facilities, and distribution centers for effective automation systems. Bundy Group is currently advising several automation firms that have a primary focus on the material handling sector, and the contracted backlog for these firms is incredibly robust due to the market demand for their solutions. To further the point, the automated material handling systems market is projected to grow to $70 billion by 2032, which is a 2022 – 2032 compounded annual growth rate of 9.4%.(1)
As we finish out 2022 and then begin 2023, the Bundy Group team is witnessing numerous positive fundamentals that will continue to impact automation businesses. The executives and shareholders that are affiliated with these organizations should monitor these trends. The result of these market activities could be enormous value creation opportunities for automation companies.
September 2022 automation transactions
Enverus, the leading energy SaaS company, announced that it has acquired Madrid-based RatedPower, a SaaS company developing solutions that automate and optimize the feasibility study, analysis, design and engineering of solar power plants and electrical infrastructure to maximize the potential of photovoltaic (PV) plants and reduce their Levelized Cost of Energy (LCOE). Learn more.
Bottomline, a leading provider of financial technology that makes business payments simple, smart, and secure, announced its acquisition of Nexus Systems, a leading provider of accounts payable (AP) and payments automation software for the real estate and property management industries. Learn more.
Samuel, Son & Co., Limited, announced its acquisition of RAMP Incorporated. RAMP Incorporated is an industrial automation company that designs, builds and implements customized systems for global customers in the automotive, consumer products, energy, pharmaceutical, medical, electronics, food and safety device markets. Learn more.
Hudson Street Solutions, Inc. (HSS), a premier PTC Onshape reseller and automation technology services provider for prototyping manufacturers, announced a major step forward in building the industry’s most advanced automated front-end solution. Learn more.
Exaktera LLC is pleased to announce its acquisition of Advanced Illumination Inc., a long-established design and manufacturer of specialty LED lighting assemblies and drivers for machine vision, industrial imaging, bio-medical and related imaging applications. Learn more.
Enghouse Systems Limited (TSX:ENGH) has acquired the business assets of VoicePort LLC, a provider of SaaS automated solutions based in Rochester, New York. Learn more.
Accenture (NYSE: ACN) has agreed to acquire Inspirage, an integrated supply chain specialist firm focused on Oracle technology. The acquisition will further enhance Accenture’s Oracle Cloud capabilities, helping it accelerate innovation for clients through emerging technologies, such as touchless supply chain and digital twins. Learn more.
Hitachi, Ltd. (TSE: 6501, “Hitachi”) announced that on August 31, 2022 it acquired Flexware Innovation, Inc. (“Flexware Innovation “) which has been a leading manufacturing systems integrator (SI) since 1996. Flexware Innovation was a strategic acquisition for Hitachi due to its focus on the Total Seamless Solution that links “shop floor” and “top floor” with data and digital technology. Learn more.
LFM Capital, a private equity firm focused on lower middle market manufacturing and industrial services businesses, announced that it has invested in Accelevation LLC (“Accelevation”). Accelevation is a vertically integrated group of manufacturing companies serving the data center, electric vehicle and robotic markets. Learn more.
Shingle & Gibb Automation, a Graybar subsidiary based in Moorestown, N.J., has acquired New England Drives & Controls, Inc., based in Southington, Conn. New England Drives & Controls has a long-standing reputation of providing advanced automation and control solutions to original equipment manufacturers (OEMs), industrial users, contract manufacturers and system integrators. Learn more.
Graybar, a leading distributor of electrical, communications and data networking products and provider of related supply chain management and logistics services, has completed the acquisition of Walker Industrial Products, Inc., based in Newtown, Conn. Walker Industrial is a leading automation solutions provider and stocking distributor for over 40 years dedicated to making its customers more competitive in this expanded global economy. Learn more.
Bundy Group is a CFE Media and Technology content partner. 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.