We’ve been telling you how automation is helping businesses grapple with labor scarcities and supply chain challenges. Another subsector in this industry is coming into the M&A spotlight. Manufacturers of parts for automated machines are receiving private equity interest, and I think this is a trend to keep an eye in 2022.
“We view automation as a key lever to help shore up supply chains and relieve labor constraints, resulting in increased investments in automation technologies and companies,” Core Industrial Partners managing partner John May tells Mergers & Acquisitions.
On Friday, Core-backed CGI Automated Manufacturing said it acquired Precision Metal Fab and Precision Tool & Die, together known as PMF. The latter focuses on laser cutting, stamping, metal die formation, welding and assembly for a number of services, including warehouse automation.
Instead of always competing for the same deals, sometimes private equity firms look to broader emerging trends in sectors that are still fragmented. Businesses have been gradually adding automation to their operation processes to fulfill more orders quickly and accurately. In November, American Eagle Outfitters (NYSE: AEO) said it is buying Quiet Logistics Inc. for $350 million.
“We believe that 2022 M&A activity will see parallel activity to 2021 despite changes in macro-economic activity as automation has shifted from a trend to a means of consistent, predictable manufacturing,” says May.
– Demitri Diakantonis