Capstone Headwaters Reports: M&A in Precision Manufacturing Industry Remains High, Bolstered by Private Equity Buyers

September 17, 2020

Boston, MA – Capstone Headwaters released its Precision Manufacturing Mergers & Acquisitions (M&A) Update today, reporting that transaction activity in the Precision Manufacturing industry has remained strong despite the pandemic.  Through August, 81 transactions were announced or closed compared to 64 through the same period in 2019—a 26.5% increase year-over-year (YOY).  The importance of end market exposure has been greatly exacerbated by COVID-19, with the Automotive, Energy, and Oil & Gas industries all facing dampened demand.  Manufacturers that serve resilient sectors in select areas of Medical, Electronics, Consumer Goods, and Aerospace & Defense, as well as those that offer specialized, value-added services have been attractive targets.  

“The sectors that are in greatest demand from an M&A standpoint are those that offer the greatest revenue visibility and today they include businesses supporting major defense programs or the manufacturing of medical devices,” according to Managing Director Ted Polk

Managing Director David Bench added, “Private equity sponsors are well positioned to assume a greater role in precision machining M&A in the near- and mid-term by tapping into over $1 trillion in committed capital. We expect continued reshoring of manufacturing and supply chain localization will drive both corporate buyers and sponsor-backed platforms to be very active in M&A in 2021.”

Private equity (PE) buyers drove almost 60% of M&A activity in the industry year-to-date, attracted to its contract-driven recurring revenue model and high level of predictably. The industry is also highly fragmented with no major manufacturers holding a significant share of the market, which provides an opportunity for PE firms to deploy a buy-and-build strategy. According to our interview with Tecum Capital, key investment criteria for firms seeking add-ons in the space include scalable business profiles and a track record for operational excellence—often evidenced by the target’s deep understanding of its manufacturing timelines and CapEx (capital expenditure).

To access the full report, click here
 

ABOUT CAPSTONE HEADWATERS
Capstone Headwaters is one of the largest and most active independent investment banking firms in the United States.  The firm has a rich 15+ year history of achieving extraordinary results for middle market entrepreneurs, business owners, investors, and creditors.  Capstone offers a fully integrated suite of corporate finance services, including merger & acquisition, debt & equity placement, corporate restructuring, valuation & fairness opinion, financial advisory, and ESOP advisory services.  Headquartered in Boston, the firm has 150+ professionals across 16 offices in the U.S., with and an international presence including over 450 professionals in 40 countries. With 16 dedicated industry groups, the firm delivers sector-specific expertise through large, cross-functional teams on a global basis.  Capstone has been named “U.S. Middle Market Investment Bank of the Year” for the past 9 consecutive years and is consistently recognized as one of the top investment banking firms to work for. For more information, visit www.capstoneheadwaters.com

For More Information Contact the Key Report Contributors:

David Bench
Managing Director
dbench@capstoneheadwaters.com
949-734-7888

Ted Polk
Managing Director
708-921-8961
tpolk@capstoneheadwaters.com

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