Advanced manufacturing companies continue to have a solid mergers and acquisitions appetite as they seek out new geographic markets, the right technology to offer customers comprehensive solutions and the people who understand that technology. In fact, half of the manufacturing sector executives surveyed for the 19th edition of our Global Capital Confidence Barometer said they plan to actively pursue M&A in the next 12 months, exhibiting a stronger inclination for dealmaking than shown by their global peers.
More than a quarter (28%) of executives said entering new markets was the strategic driver behind M&A. Another 20% cited changing customer behavior and 18% noted the need to acquire talent.
That need for talent is not only a reflection of tightening labor markets, but also a sign of how technology and digital are changing the sector. When looking at the major themes in M&A over the next 12 months, an increase in cross-sector M&A driven by technology and digital, and an increase in private equity as a major acquirer of assets, are tied (28%) as the most frequently cited theme.
Divestiture activity is helping to drive dealmaking as the sector continues to respond to the push by investors for companies to focus on their core capabilities. Two-thirds (66%) of manufacturing executives said their companies now review their portfolio more than once a year to seek divestment opportunities and almost three-quarters (72%) said that they identified an asset to divest as a result of their latest review. The risk of disruption from forces such as technology, convergence or geopolitical uncertainty was cited by 40% as the reason for the divestiture, while 32% cited underperformance of the asset.