Global M&A Trends in Industrial Manufacturing and Automotive: 2023 Mid-Year Update

Deal activity is expected to continue at a stable pace in 2023, driven by strategic investments, divestitures and transformative transactions.

Deal activity in industrial manufacturing and automotive (IM&A) is expected to continue at a stable pace for the remainder of 2023, much as it did during the first half of the year, as buyers and sellers alike find opportunities despite the global macroeconomic environment. Factors such as the war in Ukraine, recession concerns, inflation, energy costs, and interest rates continue to affect businesses and growth projections. This has brought a back-to-basics approach to deal making and an increased level of diligence as parties seek to mitigate risk.

Market challenges are renewing the focus on portfolio and strategic reviews. These assessments are highlighting strategic gaps in technologies and capabilities. Companies are considering acquisitions to fill these gaps, especially in areas such as robotics, automation, artificial intelligence, cybersecurity, and data analytics. Deals are also helping mitigate supply chain uncertainty through nearshoring; address environmental, social and governance (ESG) goals; and drive value creation opportunities.

In the challenging market dynamics, companies are assessing portfolio performance to determine whether to divest non-core assets to fund further strategic and corporate investments. Sellers are looking to optimise portfolios for growth and profitability. Strategic divestitures are being viewed as ways to enhance current capital allocations and to reinvest capital in new segments and subsectors.

‘There is pent-up demand for deal activity; however, market challenges and uncertainty, as well as valuations, will result in a stable level of activity in the near term. Focused strategic acquisitions and non-core divestitures will be driving this pace.’

Michelle RitchieGlobal Industrial Manufacturing and Automotive Deals Leader, Partner, PwC US

‘There is a strong appetite by corporates with strong balance sheets to acquire strategic capabilities and transform their operational and tech footprint. ESG is also becoming a critical value creation lever for industrial manufacturing companies, especially in Europe.’

Nicola AnzivinoGlobal Industrial Manufacturing & Automotive Deals Leader, Partner, PwC Italy

2023 mid-year M&A outlook for industrial manufacturing and automotive

Deal activity in the near term is expected to remain at the current pace, with activity expected to grow as certainty increases in global markets, especially in the mid market area. This activity level will likely come from a mix of acquisitions to fill in strategic gaps in technology and capabilities, divestitures to maximise capital allocation, and some larger more transformative transactions.

Business services transactions and tech-driven deals are expected to continue to drive relatively high multiples and crowded auctions. A continuation of difficult financing conditions may dampen the appetite of PEs for large transactions in the second half of 2023, and big IPOs are not expected to win the confidence of public market investors. Furthermore, geopolitical tensions, particularly with China, may affect some inbound and outbound opportunities in the industrial sectors.

Prepared CEOs, with a well-thought-through M&A strategy, will be best positioned to take advantage of deal opportunities and to create value and sustained outcomes as the market rebounds.

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Explore our local M&A Trends in Industrial Manufacturing and Automotive Sectors from the following countries or regions:

Want to know the M&A trends we expected in Industrial Manufacturing and Automotive Sectors at the beginning of 2023?

Read our 2023 Outlook