M&A Opportunities with Automation companies in Europe, the USA, and India

We have recently done quite a lot of research on automation companies in Europe, the USA, and India. If you’d like to learn our condensed thoughts about it in a 6-minute video, please click here:

European Market Slowdown:

Industrial automation in Europe is facing a slowdown due to lower industrial output, particularly in the automotive sector, leading to a squeeze on automation companies. This is compounded by existing labor shortages.

Types of Automation Companies:

The automation ecosystem includes engineering companies, machinery manufacturers, component suppliers, and software providers. The video focuses on automation solution providers.

Challenges for Solution Providers:

These companies face cost pressures, delayed projects, and a shortage of skilled talent. This environment often leads leadership teams to consider strategic options like investment, mergers, or succession planning.

M&A as a Strategic Lever:

Despite the short-term dip in demand, long-term drivers like labor shortages and digital transformation are still relevant. This makes M&A a strategic tool for consolidation, acquiring talent or technology, or providing an exit opportunity.

Global Market Comparison:

India’s automation sector is growing rapidly (30-40%), the US shows moderate growth (8-12%), while Europe’s growth is much slower (3-4%). This growth disparity fuels cross-border M&A interest.

Valuation Benchmarks:

The video provides EBITDA multiple ranges for private market automation companies: North America (10-14x), Europe (7-11x), and India (20-25x).

Cross-Border M&A Trends:

US companies are buying niche automation tech and IP in Europe, and European companies are increasingly acquiring in the US. Geopolitics influences these decisions, emphasizing resilience and regional exposure. German firms are not significantly buying into Chinese automation tech due to regulatory concerns, but there is activity in Eastern European markets like Hungary.