Manufacturing M&A is coming off one of the strongest years in over two decades. Sales of lower middle-market manufacturing companies soared to record levels with sale prices rising above list price, in some cases as high as 30%. But will this trend continue in 2022?
Looking at the hottest industries that will likely drive M&A activity in 2022
- Additive Manufacturing: Additive Manufacturing, a $12 billion dollar industry in 2020 is expected to reach $51 billion by 2030, at a CAGR of 15%. Two of the largest segments of growth are expected to be in the medical and aerospace industries. M&A activity will likely soar in these sub-sectors.
- Air Purification: The rise of airborne diseases has led to increased interest and growth in the air purification market. The COVID-19 pandemic ignited a firestorm of interest in this market. In 2020 the market size was estimated at $10.7 billion. The industry is expecting a CAGR of 10% to hit 22.8 billion by 2028. In addition to airborne diseases, the market is expected to be driven by pollution in urban areas.
- Agriculture Robotics – With the world population expected to grow to over 9 billion by 2050, artificial intelligence innovation in this industry will be necessary to accomplish the 25% efficiency improvement needed to feed the population. In 2020 the Agriculture Robotics industry was $4.6 billion and it’s expected to grow to $12 billion by 2022 with a CAGR through 2025 of 34.5%. With the expected growth rate, smart investors will seek acquisitions within this industry. Companies already making components for the AG market will be likely acquirers in this space.
- Chemical Manufacturing – Revenue for US chemicals manufacturing was forecast to grow an amazing 17.8% in 2021 and at an annual compounded rate of 8% through 2024. Pharmaceutical, agriculture, and water treatment are expected to be some of the most sought-after sub-sectors within the industry.
- DoD Contracting – Two areas will likely drive growth and M&A in the DoD arena. The first is Advanced Air Mobility (AAM). Companies developing electric vertical takeoff and landing (eVTOL) will drive investment in this sector. The second is decarbonization. There will be a continued shift to develop technologies that will lower carbon emissions. Companies at the forefront of these initiatives will continue to attract investment. This sector saw $22 billion in transactions in 2020. By August 2022 deal value had already reached over $60 billion.
- Electric Vehicle Components – The global electric vehicle market was valued at $162.34 billion in 2019 and is projected to reach $802.81 billion by 2027, registering a CAGR of 22.6%. North America is estimated to reach $194.20 billion by 2027, at a significant CAGR of 27.5%. With the federal government’s fleet going electric and DoD moving in that direction, these numbers will likely increase. Large industry players will seek acquisition to remain competitive and ensure deliverability.
- Electronic Contract Manufacturing – The Electronic Contract Manufacturing market size was 445.8 billion in 2020 and it’s expected to grow to 788.9 billion by 2027, a CAGR of 8.5%. Accelerated Manufacturing Brokers, Inc. currently has buyers seeking an acquisition in this sector of companies with revenues between $4M to $20M.
- Food Manufacturing – The COVID-19 pandemic helped certain types of businesses, and those sectors are now targeted acquisitions for smart investors. The sales of packaged foods surged considerably in 2020 in the U.S. due to the COVID-19 pandemic and lockdown. The retail sales of these products grew with a double-digit growth rate from March to May in 2020.
- Infrastructure Repair – With the new $1.2 trillion infrastructure spending bill passed in 2021, companies providing infrastructure repair services will both grow and become acquisition targets. The water infrastructure repair market alone is at $95 billion and is expected to rise to over $141 billion by 2026.
- Medical Packaging – The global medical flexible packaging market size was valued at $15.8 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 6.5% from 2021 to 2028. The extensive use of flexible packaging solutions in the medical and pharmaceutical sectors is driving the market growth.
- Non-Destructive Testing Equipment – The global non-destructive testing equipment market was valued at USD $8.4 billion in 2020, and it is projected to be worth USD $11.7 billion by 2025, at a CAGR of 7.0% from 2020 to 2025. Security applications within this sector are expected to drive growth and M&A activity.
- Small Arms – M&A activity is driven by growth in various sectors. As of November 2021, Americans bought 18 million firearms. This is on the heels of a 65% increase in 2020 over the prior year. The sector is expected to grow to $9 billion by 2030. Acquisitions are currently being sought by companies with revenues between $4MM to $50MM in particular areas of the country.
Although the 2022 Manufacturing M&A Outlook highlights the expected hottest industries, the 12 listed are certainly not the only manufacturing sectors we work in.
Accelerated Manufacturing Brokers, Inc. specializes in the sale of lower middle-market manufacturing companies, and we work nationally. We specialize in founder-led or family-run companies.
Whether in the above hottest industries categories for 2022 or not, our clients typically share the following characteristics:
- They want the jobs to remain in the community
- They want future opportunities for their staff
- They want an acquirer who will ensure the continuity of the company
- They want an acquirer who will respect their legacy, yet grow the company
- They want to ensure they get a market-driven price and not leave money on the table
It is possible to achieve all the above. If you’re considering transitioning into retirement, schedule a call today to learn about the Accelerated Process. Conversations are always confidential and without obligation.
For most, the sale of their manufacturing company is the largest transaction of their lifetime. Becoming educated on the process before you go through it is essential and can impact what you ultimately net from the transaction.