Rebuilding America, One Deal at a Time: Strategics Lead the Onshoring M&A Wave

Investment bankers point to a reality in which factory build-outs and private markets-led manufacturing sector acquisitions will require much more lead time.

However, bankers are confident that the first sequence of deals to fall into place will involve strategic buyers scouring an array of industrial subsectors that often get packaged together as “ancillary/support.”

Take packaging, for example.

It’s often an early plot point in any story about ramped-up production. Even before the Trump administration announced its aggressive tariffs strategy, a Japanese packaging player, Toppan Holdings, in an effort to increase its U.S. presence, acquired the Thermo-formed & Flexible Packaging business of Sonoco Products (NYSE: SON) in a deal that closed on the day before so-called Liberation Day.

August also saw the merger of Trivalence Technologies and Star Plastics, a portfolio company of Akoya Capital Partners. Together, the new entity is looking to wrap itself in revenues connected with thermoplastics, ubiquitously used in consumer goods packaging.

Strategics Lead the Way

Considering Trump’s attempted re-design of the world’s manufacturing stage as well as the sheer mountain of private market dry powder in need of deployment, industrials-focused bankers might have expected more activity.

But it’s been slow-going, owing to several reasons including:

• A continued lack of clarity surrounding tariffs
• Immigration issues
• Automation solutions proving hugely complex to execute
• Factory workers generally in short supply

So, while there is a clear recognition that in the long term more onshoring is going to have to happen, the projected returns on such endeavors are too murky to even begin to estimate, keeping PE firms sidelined.

In an August report, KPMG underscored how the 2025 second quarter unfolded under a cloud of trade policy uncertainty with certain metrics up but others down (see chart). Notably, PE firms took to the sidelines, reflecting a “more selective investment posture.”

Ted Polk, co-head of the industrials group at Capstone Partners, agrees that it makes sense that corporate buyers would be first to act rather than financial sponsors.

“The strategic acquirers and entrepreneurs will lay the pipe first,” he says. “They’re more comfortable moving before tangible onshoring revenues are added” versus the financial sponsor community, much more poised to become active later on down the line as the onshoring pace picks up and there’s less ambiguity.

Many buyers are focusing on ways to indirectly play the onshoring game, according to Polk. Industrial segments where he sees increasing interest include packaging, equipment manufacturers and engineering firms, each perfectly positioned to benefit from greater investments in domestic production.

Describing a recent mandate involving the sale of a U.S.-based equipment maker to an Asian acquirer, Peter Finn, head of industrials M&A at Brown Gibbons Lang, discussed how over the course of a few months the acquirer’s mindset evolved from viewing the target as “nice to have” to representing a priority strategic imperative due to the changing geopolitical landscape.

Earlier this year, BGL advised on New State Capital Partners’ sale of MakoRabco to Trachte Building Systems. MakoRabco specializes in making pre-designed metal buildings used by general contractors and architectural engineers.

Heightened Interest

“Clearly, there seems to be generally heightened interest in the concept of doing more manufacturing in the U.S.,” Finn says of discussions he has been having lately.

But, he adds, the pipeline of manufacturing deals and new organic projects will only pick up when there is more clarity around tariff and immigration policies. “There’s been some increase in certainty, but not nearly enough,” he explains. “I think the markets are still waiting for more. Until then, it will remain a challenging environment.”

Dave Poniatowski, a principal EY-Parthenon, noted in a July report how manufacturers’ interest in doing deals seems pent up. Four-fifths of industrial manufacturing CEOs in an EY-Parthenon global survey said they had stopped or delayed a planned investment because of geopolitical or trade policy uncertainty, owing to court rulings and ongoing negotiations. And yet, nearly half affirmed they still expect to actively pursue acquisitions in the next 12 months.

If and when the onshoring trend ever truly manifests in the way that Apple (Nasdaq: AAPL)’s CEO predicts, bankers do expect PE firms to help tip over some key dominoes.

Some industry estimates peg PE dry powder, as of the end of last year, at more than $1 trillion. Robotics is an area that could be ready for its moment after decades of gradual progress among an ocean of startups and later-stage privately held companies. BGL’s Finn confirms the automation space to this day remains slow to crawl out of its nascent era.

And, because of that, growth-oriented PE firms right now have an opportunity to snap up crucially important systems integrators (SIs), which work with manufacturers to implement custom automation solutions. PE firms get to play a role doing their thing: creating value by way of scale and diversification.

“The SI landscape today is largely characterized by smaller, local or regionally focused operators,” Finn says. Scale and advanced capabilities put privately backed SIs in a position to “win larger, complex projects with more sophisticated customers.”