Summary

In today’s competitive environment, manufacturing companies continue to face pressure from a variety of challenges. From supply chain issues to rising day-to-day operating costs to labor shortages—and even climate change and turbulent geopolitical climates—leaders are on high alert for the health of their businesses.

And many are turning to an “old new” technology to solve these short- and long-term business problems: automation. The origin of this term is debatable, but it came into common usage in the mid-1940s with the automobile industry and its mechanized production techniques.

Today, automation – including robotics, predictive analytics, machine learning and artificial intelligence (AI) – offers companies solutions to a wide range of business challenges that were previously difficult to implement.

But what about mergers and acquisitions? Do they have an impact on the industry? We believe the answer is a clear yes. Companies looking to gain a competitive advantage over others in their respective fields are increasingly turning to automation.

Gone are the days when the value of a company was judged solely on the basis of the number of employees or revenue. Today, technological capabilities, especially in the area of ​​automation, are a key factor in valuing a company.

One example I like to use is cloud computing and its connection with machine learning. By enabling the manipulation of very large databases, this connection has broken new ground in the M&A landscape.

As we move forward, more tactical and strategic benefits will emerge. We are already seeing the impact of several aspects of automation I mentioned earlier on M&A in the manufacturing sector – from AI and advanced robotics to aligning automation with increasing environmental sustainability goals. These are helping to drive data collection and retrieval, financial and strategic diagnostics, and ecosystem mapping, among other things.

These trends not only shape the way companies operate, but also influence buying and selling strategies within the industry.

In addition, there are other targeted and evolving breakthroughs in the field of manufacturing automation:

• Technologies such as real-time monitoring of devices provide valuable data on operational efficiency
• Machine learning algorithms are used to predict maintenance needs, thereby reducing downtime.
• The technology of automated guided vehicles (AG) is revolutionizing material transport and intralogistics.

Successfully implementing automation improves the company’s bottom line and, most importantly, increases its attractiveness to potential buyers or investors. Automation also improves scalability and helps future-proof operations – two extremely important aspects in the M&A world.

Other aspects of automation in manufacturing mergers and acquisitions:

• Deal sourcing could easily be made more efficient by developing databases that can thoroughly evaluate data on solid potential targets for buyers.
• As technology matures, we may also see such opportunities in the form of more thorough background checks on owners and management – ​​perhaps even in the form of behavioral analysis.
• Other parts of the deal process that could be impacted by automation include strategy development, integration management and sales preparation

The trend towards more automation will only get stronger. Looking back over the last four or five decades, it is amazing how the industry has not only changed but also evolved. However, it is important to remember that the industry is driven by competitiveness and the desire to be “number one.”

Curiosity and a genuine need for improved processes were the starting point for automation. By maintaining and developing this inspiration, we will continue to move our industry forward.

In summary, supply chain disruptions and associated inflation will most likely lead to vertical consolidation at least to some degree. Sustainability and other environmental, social and governance (ESG) issues are also a growing M&A theme, as most boards will evolve and reshape their portfolios in an effort to withstand and manage scrutiny.

The bottom line is that we expect moderate to significant M&A activity in the manufacturing sector this year – and at least through 2025. Companies that can successfully navigate these complexities and capitalize on M&A opportunities are likely to emerge as winners in the years to come.

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