ISSUE 4 | 2021
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DATA REMAINS PAIN POINT Another trend identified by BDO’s survey is manufacturers’ struggle with constructing full digital threads throughout their operations. Digital threads are the communication frameworks connecting data flows across supply and manufacturing chains. The data is core to generating an integrated view of products and product parts throughout their lifecycle. One of the main issues affecting digital threads is breaking down data silos. The underlying issue is often that companies struggle to gather and structure data effectively. As a result, high levels of investment in areas such as data analytics are not necessarily yielding the hoped results. According to IDC, this contributes to increased interest in manufacturing technology M&A throughout manufacturing, as companies focus on innovating and capturing market shares. Simultaneously, it incentivises M&A in the pursuit of growth opportunities for manufacturing technology start-ups and scaleups. Activity includes an increasing number of acquisitions made by advanced manufacturing companies. One example is Schneider Electric’s acquisition of ProLeiT to expand its reach in the market for automation and management of manufacturing plants.
M&A INCLUDES SPACS M&A activity also includes strategic investors, some of which are deploying novel approaches, such as SPACs. One example is Cascadia Capital US$150 million Cascadia Acquisition Corp SPAC. The goal is to pursue an emerging technology company in the Industry 4.0 space. Many other deals in technology space, including manufacturing technology, are also led by outside investors. A 2021 report from Bain & Co. estimates that up to 75% of acquisitions in technology comes from companies in other industries and private equity. One active PE in the space is Navitas Capital, which has recently made two data-related in the manufacturing technology space – BDR and Vantage AI. With record levels of dry powder among strategic investors, M&A activity in advanced manufacturing technology, such as Industry 4.0, is likely to increase. This trend will be bolstered by the need for both technology companies and parts of the manufacturing industry to address the issues surrounding data by continuing to divert capital toward acquisitions and investments in advanced digital technologies.
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