Manufacturers’ M&A sets stage for sweeping change

Hectic M&A activity in the industrial and manufacturing (IM) sector is both a catalyst for, and a response to, massive change. In 2021, IM companies doubled down on the transition to new digitally-enabled products and business models—everything from robotics to electric vehicles. The rationale for deal making has changed: from adding scale or gaining new customers, to finding new sources of growth with new kinds of products and business models.

M&A activity in IM soared to a new record of 10,173 deals worth $786 billion in 2021, 83 percent higher in value than in 2020 and 73 percent more than 2019. Deal volume jumped 41 percent in 2021, compared to 2020, and average value was 30 percent higher. (See the charts below for more)

Looking ahead, we believe these trends will drive healthy IM deal activity in 2022:

• Supply chain disruptions are expected to drive a surge in M&A for component suppliers
• The electrification of cars will have a profound effect on automotive suppliers—many may have to acquire or sell assets to survive
• President Biden’s November 2021 infrastructure bill will lift industries involved in roads, bridges, tunnels, and other infrastructure sectors
• Portfolio optimizations will lead to further restructuring among manufacturers, especially for diversified industrials
• Entrepreneurs are favoring SPACs as a fast way to go public in new industries (e.g. commercial space, electric vehicles, electric vertical take-off and landing aircraft)