In this M&D M&A Industry Update, we explore the M&A activity and projections for the Engineered Components sector within the M&D industry. In this M&D M&A Industry Update, our experts share their insights on the current state of the Engineered Components M&A market and look at the factors influencing the broader M&D industry.
- M&A deal volume in the Engineered Components (“EC”) vertical was down approximately 9 percent in the YTD 2023 period (through November). While down, this trend compares favorably with overall M&A volume which was down over 20 percent during the same timeframe. As they always do in times of uncertainty, investors seek investment in the more stable segments of our economy and EC companies fit the bill.
- Valuation multiples in the EC vertical expanded in Q4 2023, reaching 8.6x EBITDA during the period. It will be interesting to see if multiples hold up similarly in 2024 – the Q4 result was materially higher than the long-term average of 7.5x.
- Publicly traded EC companies continue to outperform the broader market. Our Objective EC Index has far surpassed the Russell 2000 over the last five years showing that EC companies are generally an attractive vertical in which to invest.
- The advance estimate of Real GDP growth in Q4 2023 was 3.3 percent, down from 4.9 percent in Q3 but still strong, bringing talk of any contraction into question. The Conference Board predicts GDP growth in 2024 at a more tepid rate of 2 percent, including potentially two quarters of slightly negative growth in Q2 and Q3.
- ISM’s Purchasing Managers Index for December 2023 suggests that our manufacturing base continues to contract, but to a lesser extent than in the preceding month. Surveyed business executives continue to tightly control business investment, material inputs, labor costs, and output.
If you are interested in discussing any of the analysis from this report, or if you would like to discuss your own transaction goals contact the Managing Directors from our M&D Industry Group below, or reach out at (800) 849-7010 or [email protected] to be directed to the appropriate team member.
This news release is for informational purposes only and does not constitute an offer, invitation or recommendation to buy, sell, subscribe for or issue any securities. While the information provided herein is believed to be accurate and reliable, Objective Capital Partners and BA Securities, LLC make no representations or warranties, expressed or implied, as to the accuracy or completeness of such information. All information contained herein is preliminary, limited and subject to completion, correction or amendment. It should not be construed as investment, legal, or tax advice and may not be reproduced or distributed to any person. Securities and investment banking services are offered through BA Securities, LLC Member FINRA, SIPC. Principals of Objective Capital are Registered Representatives of BA Securities. Objective Capital Partners and BA Securities are separate and unaffiliated entities.