Acquisition Activity in Manufacturing: What Business Owners Can Learn

Key insights

• The need for technology or supply chain efficiencies often drives manufacturing acquisitions
• Improving automation and AI analytics capabilities can make your company a more attractive acquisition target
• Also keep an eye on environmental, social, and governance (ESG) concerns, which have increased as a reason for acquisitions

Acquisition activity in manufacturing has been driven by industry shifts, technological advancements, and evolving market dynamics over the past decade. Understanding these acquisition trends is crucial for business owners who are considering selling their companies within the next five years.

A closer look at recent acquisitions reveals opportunities and strategic moves that could help owners position themselves for successful exits. In this guide, we’ll review notable acquisitions in specific manufacturing sectors, explore what drives these deals, and explain how you can capitalize on industry trends to maximize your company’s value.

Notable acquisitions in the manufacturing industry

Here’s a look at high-impact acquisitions from the past decade that reflect broader trends in the manufacturing sector.

What these and other acquisitions reveal

• Technology-driven deals
  • Automation, AI, and industrial software are top acquisition targets.
  • Companies with strong R&D capabilities are highly prized.
• Supply chain resilience
  • Acquiring suppliers or distributors helps stabilize supply chains.
  • Vertical integration has become a critical M&A strategy.
• Market expansion and diversification
  • Many acquisitions aim to diversify product offerings and reach new markets.
  • Expanding into adjacent industries helps reduce market risk.
• Sustainability and ESG compliance
  • Some buyers are prioritizing businesses with sustainable production methods.
  • Green manufacturing businesses are commanding premium valuations.

Top companies involved in acquisitions in manufacturing

These companies are shaping the M&A landscape with frequent acquisitions.

1. GE

• Focus: energy, healthcare, and industrial manufacturing
• Why they acquire: to strengthen core business areas and explore emerging technologies

2. Honeywell International

• Focus: aerospace, industrial software, and automation
• Why they acquire: to build smart factory capabilities and expand digital operations

3. Siemens

• Focus: automation, industrial software, and smart infrastructure
• Why they acquire: to solidify leadership in Industry 4.0 technology

4. PPG Industries

• Focus: specialty chemicals and coatings
• Why they acquire: to diversify product lines and access new end markets

5. Tesla

• Focus: energy storage and automotive technology
• Why they acquire: to advance battery innovation and energy storage

Manufacturing-industry acquisition drivers: insights for business owners

Several factors are driving increased acquisition activity in the manufacturing sector, creating opportunities for sellers and fueling strategic growth for buyers.

• Technological advancements
  • The adoption of smart manufacturing technologies such as automation, AI, and IoT has become a necessity.
  • Acquiring companies with proprietary technology helps established manufacturers modernize and maintain competitiveness.
  • How this might affect you: Automation, digital manufacturing, and AI-driven analytics are now must-haves. Companies with cutting-edge technologies are being acquired at high valuations, so make sure your CTO is well resourced.
• Global supply chain shifts
  • Supply chain disruptions due to the COVID-19 pandemic and geopolitical issues have caused businesses to integrate suppliers through acquisitions.
  • Vertical integration ensures better control over sourcing, production, and distribution.
  • How this might affect you: Consider acquiring suppliers and logistics firms as part of a strategy for ensuring supply chain stability. This could give you end-to-end control over the production process.
• Sustainability and ESG initiatives
  • Buyers are actively acquiring companies with eco-friendly production processes and technologies to meet sustainability goals and comply with stricter environmental regulations.
  • How this might affect you: You need to research standards and regulations in the areas where you do business. Setting ambitious but achievable ESG goals can help your marketing efforts and improve your prospects as an acquisition target.
• Industry consolidation
  • To gain market share and reduce operational costs, larger manufacturers are consolidating through mergers and acquisitions (M&A).
  • This strategy allows for scaling operations, reducing costs, and eliminating competition.
  • How this might affect you: As a small or mid-sized business, you could attract interest from an industry giant looking for greater economies of scale.
• Diversification and market expansion
  • Companies are using acquisitions to enter new industries or expand product lines.
  • Market diversification reduces business risk and opens new revenue streams.
  • How this might affect you: Mid-sized manufacturers can continuously improve processes and operations to remain competitive or position themselves as attractive acquisition targets.

How to capitalize on acquisition trends in manufacturing

If you’re considering selling your business or planning for future growth, here’s how to position your company for a successful sale.

1. Invest in technology and innovation

• Adopt Industry 4.0 technologies like automation, IoT, and robotics.
• Invest in R&D initiatives.

2. Strengthen supply chain operations

• Build reliable supplier partnerships and diversify sourcing.

3. Focus on sustainability and ESG compliance

• Implement eco-friendly manufacturing processes and reduce carbon emissions.

4. Diversify product lines and markets

• Expand your product portfolio to reduce dependency on a single market.
• Enter adjacent markets to broaden revenue streams.

5. Build a strong management team

• Invest in capable and experienced leaders.
• Ensure key executives have clear roles and documented responsibilities.

6. Prepare for due diligence

• Keep financial records, contracts, and operational procedures well-documented.
• Be ready for an in-depth review of your company’s operations.

Good ideas for business owners

Understanding acquisition activity in manufacturing can help you better position your business for a sale or expansion. Here are some critical points to remember:

• Stay informed. Follow industry news and monitor M&A activity in your market.
• Invest in core strengths. Build competitive advantages through technology, efficiency, and sustainability.
• Be proactive. Consider acquisitions of smaller firms to strengthen your market position before being targeted.
• Engage experts. Work with an investment bank, legal professionals, and accountants to streamline the process when you’re ready to sell.

Final thoughts

Acquisition activity in manufacturing is reshaping the global industrial landscape. Understanding these trends, staying informed, and investing in the right areas can significantly enhance your business’s value and appeal to potential buyers.

By positioning your company strategically, you’ll be well-prepared for future acquisition opportunities and achieve the best possible outcome when the time comes.