Automation mergers, acquisitions, capital markets analysis: Q4 2021
The second half of 2021 had many mergers and acquisition and capital raise activity in the automation sector. Nineteen automation transactions were made in the fourth quarter of 2021 and are highlighted.
Bundy Group, an investment bank and advisory firm, provides an update on mergers & acquisitions and capital placement activity in the automation market.
The second half of 2021 has continued to witness a tremendous amount of mergers and acquisition and capital raise activity in the automation sector. Strategic buyers, private equity groups, family offices and fundless sponsors have been attracted to the industry segment for a variety of reasons. This includes the projected growth of the automation market, the opportunity for consolidation in the segments, and the ability to own proprietary hardware and software systems.
A supporting statistic from the recent J.P. Morgan report on the automation industry indicates that approximately 88% of control system integrators surveyed anticipate growth in demand for automation solutions over the next 12 months [ J.P. Morgan – Automation Industry Report; November 12, 2021]. As demonstrated by the plethora of transactions that occurred in 2021, buyers and investors are bullish about the trajectory of the automation space, and there are no signs of letting up for the buying and selling of, or investing in, automation companies.
Two representative transactions to note are Inframark’s acquisition of MR Systems and Sverica Capital Management’s investment in Automated Control Concepts (“ACC”). MR Systems, a leading automation and cybersecurity solutions provider focused on the water and wastewater sector, was acquired by Inframark, an industry leader in the operations, maintenance, and management of water and wastewater facilities (see below case study). Sverica, a private equity investment firm, acquired a majority position in ACC, a systems integrator specializing in process control, manufacturing intelligence and cyber security & industrial networking.
Greg Hylant, Vice President with Sverica, stated, “The systems integration ecosystem within the industrial automation space is extremely fragmented, with only a small handful of players having reached national scale. We identified ACC as a high-growth regional platform that could benefit from our capital and expertise in business-building to take full advantage of the wave of American manufacturers embracing the power of Industry 4.0.”
These two transactions capture the range of M&A and capital raise events that are occurring across automation, robotics, control system integration, software and Industrial Internet of Things (IIoT). A total of 19 automation transactions were made in the fourth quarter of 2021.
Q4 2021 M&A Transactions
Yokogawa Electric Corporation (TOKYO: 6841) announces it has acquired all of the outstanding shares of PXiSE Energy Solutions LLC, a San Diego-based developer of software that enables utilities and other grid operators to deliver reliable and stable power by managing renewables and distributed energy resources (DERs) in real time. Through this acquisition, Yokogawa will build on its capabilities in the monitoring and control of power generation facilities and assist customers in the power transmission and distribution sectors to meet their clean energy goals. Learn more
Regal Rexnord, a global provider in the engineering and manufacturing of industrial powertrain solutions, power transmission components, electric motors and electronic controls, and specialty electrical components and systems, has announced that it has completed the strategic acquisition of Arrowhead Systems (“Arrowhead”), based in Oshkosh, Wis. Learn more.
Circonus, the full-stack monitoring and analytics platform built for the modern-day enterprise, today announced it has secured $10 million in Series B funding led by Baird Capital with participation from existing investors NewSpring Capital, Osage Venture Partners, and Bull City Venture Partners. The new funding will be used to accelerate growth, scale product innovation, and build upon the company’s record-setting performance in 2021. Learn more.
Middle market private equity firm One Equity Partners (OEP) has completed the acquisition of USNR, the world’s most comprehensive supplier of equipment and technologies for the wood processing industry, and Wood Fiber Group, a manufacturer and supplier of sawmill consumables, parts, and services. Learn more.
ATS Automation Tooling Systems Inc. (TSX: ATA) (“ATS” or the “Company”), an industry-leading automation solutions provider, announced it has entered into a definitive agreement to acquire SP Industries, Inc. (“SP”), a designer and manufacturer of high-grade biopharma processing equipment, life sciences equipment, and lab apparatus products for US$445 million (~C$550 million), subject to customary post-closing adjustments, representing 15.3x SP’s trailing 12 month adjusted EBITDA or 11.9x post synergies(1). Learn more.
Inframark, LLC, an industry leader in the operations, maintenance, and management of water and wastewater facilities, is pleased to announce that it has acquired MR Systems, Inc., an Atlanta-based company that specializes in providing automation, process controls, instrumentation, and supervisory control and data acquisition (SCADA) systems for the municipal water and wastewater market. The addition of MR Systems to Inframark’s existing SCADA division brings a level of scale that will enable Inframark and MR Systems to create an embedded SCADA offering throughout the Inframark portfolio, primarily consisting of water and wastewater contract operations and municipal utility district operations and maintenance (O&M) clients, in addition to their commercial and industrial customer base. Learn more.
Audax formed EIS in September 2019 through the carveout of a collection of distribution assets from Genuine Parts Company (NYSE: GPC) with the vision of creating a value-added distributor of process materials and supply chain solutions to customers that support critical electrical and power transmission infrastructure. Audax will continue to work with the EIS management team to drive further organic growth and accelerate its acquisition strategy to expand its distribution footprint, customer base, and portfolio of value-add offerings. Learn more.
Inphase is a complete E&I construction, commissioning and maintenance service provider with a strong customer base and presence across southern Alberta and Saskatchewan. They are a full-service electrical contractor for large industrial Solar projects and were the first electrical contractor to install an industrial-size solar farm in Western Canada. Learn more.
H.I.G. Capital, a leading global alternative investment firm with over $45 billion of equity capital under management, announced that its portfolio company, United Flow Technologies, a platform established to invest in the municipal and industrial water and wastewater market, has completed the acquisitions of Tesco Controls, Inc. (“TESCO”) and The Henry P. Thompson Company (“HPT”). TESCO and HPT represent UFT’s second and third acquisitions, respectively, following its initial acquisition of MISCOwater in July 2021. Learn more.
Sverica Capital Management LP (“Sverica”), a private equity investment firm, today announced that on October 22 it acquired a majority position in Automated Control Concepts, LLC (“ACC” or the “Company”), a systems integrator specializing in process control, manufacturing intelligence and cyber security & industrial networking. Learn more.
Fabric announced that it has closed a $200 million Series C funding round led by existing investor Temasek, with participation from Koch Disruptive Technologies, Union Tech Ventures, Harel Insurance & Finance, Pontifax Global Food and Agriculture Technology Fund (Pontifax AgTech), Canada Pension Plan Investment Board (CPP Investments), KSH Capital, Princeville Capital, Wharton Equity Ventures, and others. Learn more.
Industrial Flow Solutions, an industrial pumping solutions provider headquartered in New Haven, Conn., recently announced that it will acquire Clearwater Controls Ltd, a wastewater solutions provider based in Glasgow, Scotland. Clearwater Controls offers a broad line of wastewater products, including deragging intelligent and process advanced monitoring technology. Terms of the acquisition were not disclosed, but Clearwater Controls will retain its company name and brand. Learn more.
Kaman Distribution Group (“KDG”) announced that it has acquired Integro Technologies Corporation. Based in Salisbury, North Carolina, Integro Technologies is a nationally recognized and industry-leading vision integrator and inspection company. With over 50 employees and 30 degreed engineers, Integro develops turn-key productivity solutions through machine vision and robotics. Learn more.
Dexterity, the creators of intelligent robotic systems for logistics, warehouses, and supply chain, today announced that it raised an additional US$140M in Series B equity funding and debt. Major existing investors Lightspeed Venture Partners and Kleiner Perkins greatly expanded their commitment to Dexterity by leading the Series B, with additional participation from Obvious Ventures, B37 Ventures and Presidio Ventures. Dexterity will use the new capital to support the growth of the company as its first thousand robots are deployed into production. Learn more.
HBM Holdings (“HBM”) announced it has acquired Control Devices, LLC of Fenton, MO. Control Devices, a portfolio company of Goldner Hawn founded in 1963, is a leading designer and manufacturer of highly engineered flow-control products utilized in niche applications across a diverse array of end markets. The acquisition expands HBM’s portfolio in the industrial components space, adding Control Devices to the existing roster of Mississippi Lime Company, Aerofil Technology, HarperLove, and Schafer Industries. Learn more.
Emerson to Receive 55% Stake of New AspenTech. AspenTech Shareholders to Receive Approximately $87 Per Share in Cash and 0.42 Shares of New AspenTech for each AspenTech Share, Providing Upside through 45% Stake. New AspenTech Expected to Drive Double-Digit Annual Spend Growth, Best-in-Class Profitability, Strong Free Cash Flow and Be Positioned to Pursue and Complete Strategic Transactions. Learn more.
IES Holdings, Inc. (“IES”) (NASDAQ: IESC) announced that it has invested in Automation Intellect, a Charlotte, NC-based Software as a Service (“SaaS”) company that provides machine performance analytics to manufacturing companies. Automation Intellect’s leading Industrial Internet of Things (“IIoT”) platform provides actionable insights to plant managers to help to reduce downtime and increase manufacturing efficiency and throughput. Learn more.
Nintex, the global standard for process management and automation, announced a definitive agreement to sell a majority stake in the company to TPG Capital, the private equity platform of global alternative asset firm TPG. Across its platforms, TPG has invested in leading software companies including C3 AI, Planview, ThycoticCentrify, WellSky, and Zscaler. Nintex’s current majority investor, Thoma Bravo, a leading software investment firm, plans to make a new equity investment in the company and maintain a significant minority interest. The transaction is expected to be completed by the end of 2021, subject to customary closing conditions. Learn more.
ECS Solutions, Inc. founded in 1977, and dedicated to performance improvement and innovation in batch manufacturing, has acquired the assets of LPR Automation, LLC of Bowling Green, KY. LPR Automation, founded in 2003, specialized in a wide range of control engineering and automation services. Learn more.