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Lead or lag? What the Industrial Internet of Things means for deals

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Opportunities the IIoT can bring in today’s deal environment

The industrial internet of things (IIoT) has the potential to dramatically boost productivity and cut costs across manufacturing, transportation, logistics and energy. These opportunities are emerging very clearly for both corporate and private equity investors.

But seizing IIoT opportunities calls for sound decisions about which capabilities to acquire, which business models to pursue, and when a strategic alliance or partnership might be the right path. Making the right call will distinguish those who lead from those who lag.

Investment grows – and so do deals

Not surprisingly, investing in IIoT capabilities and solutions is becoming a growing priority for leading industrial and technology players. They’re looking to enhance their capabilities through embedded sensor technologies that collect new streams of operational data, and they want to use advanced analytics and machine learning to get maximum value from that data. IIoT spending across the manufacturing, transportation and utilities sectors alone reached an estimated $325 billion in 2016. It’s expected to grow to nearly $600 billion by 2020.1

Mergers and acquisitions (M&A) will be central to industrial and technology firms’ strategies as they try to tap into the opportunities the IIoT creates. Many leading analytical applications and platforms are being developed by software startups or small technology firms, which can be attractive acquisition targets. The advent of the IIoT has also created opportunities to develop innovative, service-based business models or pursue partnerships.

IDC, Internet of Things Spending Forecast to Grow 17.9% in 2016 Led by Manufacturing, Transportation, and Utilities Investments, According to New IDC Spending Guide, January 2017

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Alastair Rimmer

Partner, PwC US

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