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Advanced Manufacturing Seeks New Markets, Technology in M&A

November 26, 2018, 07:14 AM
Filed Under: Manufacturing

The appetite for dealmaking among global advanced manufacturing executives is strong, with half (50%) of respondents to the latest EY Advanced Manufacturing Global Capital Confidence Barometer (CCB) planning to actively pursue mergers and acquisitions (M&A) in the next 12 months. The report also reveals that 91% of executives expect the M&A market to improve in the next 12 months.

Manufacturing executives are highly confident about the macroeconomic environment the report finds. Eighty-five percent of respondents expect the global economy to improve, and 86% anticipate better corporate earnings over the next 12 months. This optimism is driving two-thirds (66%) of executives to review their portfolios for divestment opportunities more than once a year. More than a quarter (28%) of executives said entering new markets was the strategic driver behind M&A.

David Gale, EY Global Advanced Manufacturing Transactions Leader, says:

“Confidence in the global economy is helping advanced manufacturing executives propel their M&A strategies. Manufacturing companies continue to look for opportunities to expand into new markets through acquisitions and are using M&A as a means to enhance technological and digital capabilities, including robotics, artificial intelligence, data analytics and establishing the shop floor of the future.”\

Rapid changes in trade policy globally have introduced a new level of unpredictability to M&A across the sector. Regulatory policy and uncertainty was cited by nearly half (48%) of executives as the leading risk to dealmaking. In response, 21% of global Mfg executives say they are focusing on more cross-border opportunities as a result of the current trade climate.

Gale says: “Despite geopolitical headwinds, and particularly ongoing trade tensions, M&A fundamentals remain robust with 57% of Mfg respondents to our latest Capital Confidence Barometer expecting to see an improvement in deal completion rates in the next 12 months. Manufacturing companies should incorporate the tariffs and trade policy changes into their overall M&A strategy and adapt accordingly. For some companies, this may mean pursuing cross-border deals to mitigate potential supply chain interruptions; for others, it might require focusing on domestic deals until trade disputes have played out.”


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