I think I recently wrote about how much I don’t care for year end recaps or next year prognoses. But, OK, I’m a sucker for a high level discussion of anticipated merger and acquisition deals in the coming year.
“The M&A outlook for Industrials is strong going into 2025, driven by improved macroeconomic influences, shifting policy regulations and divestitures to focus on core operations and strategic capital investment.”— Michelle Ritchie, Industrial Products Deals Leader
She continues in her report:
Industrial manufacturing deal activity expected to increase with continued focus in mid-market space.
We expect mergers and acquisitions (M&A) activity to increase in the industrial manufacturing sector in 2025, propelled by a more favorable economic environment and the conclusion of the US presidential election. Specific macro tailwinds include:
- Increased investor confidence following the election outcome
- A 75-basis-point reduction in interest rates since September 2024
- Inflation decreasing to approximately 3%
Companies are investing in several key manufacturing-related strategic areas, which are expected to accelerate M&A activity due to the time advantage of buying over building. These include:
- Digitization and technologically advanced equipment, which drive growth in fields such as robotics, automation equipment, sensors, monitoring and measurement devices. Companies are pursuing manufacturing efficiency gains and performance improvements to offset margin compression and support growth.
- Aging equipment and infrastructure, which create a need for replacement or refurbishment work, as well as the sale of parts and components for ongoing maintenance and repair needs.
- A continued focus on environmental sustainability, such as energy efficiency, reduced emissions and decarbonization, which drives the replacement of equipment and infrastructure with products that help companies meet regulatory standards, even if these are relaxed under the new administration.
- Government funding, which provides companies with resources to replace, upgrade or repair existing equipment and infrastructure.
