HORIZONS | BDO'S GLOBAL VIEWOF MID-MARKET DEAL ACTIVITY 55
INDUSTRIALS &CHEMICALS M&A FUTURE LOOKS BRIGHT FOR INDUSTRIALS & CHEMICALS M&A
BIG PICTURE • Industrials & Chemicals M&A deal numbers increased by 18% in 2021 compared to 2020 • Operational issues such as digitalization and the disruption of the supply chain are occupying the industry more than ever before • M&A outlook is favourable for 2022 due to the low interest environment and widespread availability of capital.
SECTORTRENDS Despite the resurgent M&A activities in Industrials &Chemicals, companies within the sector still face some challenging macroeconomic effects. To improve their chances of outperforming competitors, Industrials &Chemicals companies should consider the following challenges as they plan their M&A activities. Not least accelerated by the COVID-19 crisis, these trends are reshaping the sector: SUPPLYCHAINDISRUPTION Supply chain disruption has become one of the most significant business challenges since the onset of the pandemic. It has made the supply chain one of the biggest priorities in management boardroom discussions. It was not only the tightening of resources as experienced at the beginning of the pandemic but also the unpredictable increase in input costs which adversely impacted supply chains. Suddenly, the ongoing theoretical talk of onshoring, reshoring or export control took on a new urgency and highlighted the necessity for more transparency in these processes. As a result, supply chain digitalization is becoming more important than ever before and companies endeavour to have greater visibility of the entire supply flow. Industrials &Chemicals
Globally, and across all sectors, there were around 2,000 more M&A mid-market transactions in 2021 than the previous year, representing an increase of 27%. Significantly higher transaction volumes were recorded in Financial Services, with 765 deals (+47%), TMT, with 2,731 (+59%), Leisure, with 281 (+21%) and Industrials & Chemicals, with 1'833 transactions (+18%). The Industrials & Chemicals sector – which includes Aerospace & Defense (A&D), Chemicals, Engineering & Construction, Industrial Manufacturing, Metals and Transportation & Logistics – accounted for roughly 20% of all global deals in 2021. Behind TMT, which saw 2,731 transactions in 2021, Industrials and Chemicals recorded the second most transactions. Looking at the Industrials & Chemicals sector more closely, it can be noted that M&A activities increased significantly across almost all regions in 2021. This was especially the case in North America and Japan, which both recorded significant increases in transaction numbers, both up by roughly 50% in 2021 compared to 2020. The only region that saw a decline in the number of Industrial & Chemicals transactions was India, with 51 transactions in 2021 compared to 54 in 2020.
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