Industrials M&A: Consolidation and Digital Transformation Will Continue to Drive a Wave of Mergers in 2019
CHICAGO, April 3, 2019 /PRNewswire/ -- In 2018, the United States continued to lead the global industrials M&A market with transactions worth $282 billion according to global management consulting firm A.T. Kearney's 2019 Industrials M&A Report. Globally, the total value of deals completed rose from $662 billion in 2017 to $680 billion in 2018.
"Since 2009, the volume of M&A deals among industrials has almost tripled," said Guido Hertel, partner at A.T. Kearney. "We expect the M&A market to continue to grow in North America and Western Europe, as well as in the emerging markets of China and India."
Analyzing more than 76,000 transactions worldwide between 2009 and 2018, the report surveyed investors, investment bankers, and executives at leading industrial enterprises on the challenges ahead and future trends. Respondents agreed that consolidation and digitization are the two key factors driving global industrials to engage in takeovers and mergers within their respective segments.
"Consolidation has many benefits and allows companies to refine their portfolios while benefiting from market reach, capability, and efficiencies gained through M&A," said Harris Ng, partner at A.T. Kearney. "As we saw in the results, the digitization of business models is clearly a driver for M&A as well."
The impact of digitization is felt broadly across the business landscape. For instance, Toyota is investing in the mobility service provider GrabTaxi, while automotive supplier Calsonic Kansei has announced its takeover of rival Magnetti Marelli. Meanwhile, electricals and electronics companies like Broadcom are targeting software and cloud technologies like CA Technologies.
Coming off a strong 2018, the outlook for 2019 remains optimistic among investors. They are expected to stay active in industrials M&A because of the availability of liquidity and opportunities for value creation which include boosting profitability at smaller players or finding the best owners for existing parts of conglomerates.
Megadeals are also expected to continue into 2019. 2018 saw more than 100 individual deals worth over $1 billion, and seven transactions even topped the $10 billion mark, the largest being the $30+ billion takeover of avionics supplier Rockwell Collins by United Technologies.
"The M&A market for industrials is still on the upswing as we head into 2019," said Hertel. "Nevertheless, political and regulatory interventions could slow down the momentum. More than $300 billion worth of deals already announced suggests we have a dynamic year ahead of us."
About A.T. Kearney
A.T. Kearney is a leading global management consulting firm with offices in more than 40 countries. Since 1926, we have been trusted advisors to the world's foremost organizations. A.T. Kearney is a partner-owned firm, committed to helping clients achieve immediate impact and growing advantage on their most mission-critical issues. For more information, visit www.atkearney.com.
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SOURCE A.T. Kearney
