January 28, 2025 Navigating the Future of Industrial Manufacturing Deals

Explore the industrial manufacturing landscape with an outlook on M&A trends influenced by technology, geopolitical factors and innovation.

We are entering a transformative era in industrial manufacturing. Mergers and acquisitions are evolving  rapidly, driven by technological advancements, geopolitical uncertainties, and changing consumer  expectations.

Our Industrial manufacturing: US Deals 2025 outlook focuses on understanding these trends and guiding  businesses through the complexities of acquisition and divestiture activities.

The current M&A landscape

The industrial manufacturing sector is experiencing a stable level of activity, with deal volumes and  values reflecting a continued appetite for strategic growth. The expected momentum in 2025 is largely  fueled by the need for technological integration within traditional manufacturing processes. Companies  are increasingly seeking acquisitions that provide access to industry leading technologies. These  technologies are not just enablers of efficiency but are reshaping many business models and value  chains.

The drive for innovation is leading to significant investments in advanced materials and digital  capabilities for this sector. Companies are aligning themselves with business partners that can help  them navigate regulatory complexities and meet the demands of modern strategies.

Challenges and opportunities

While the outlook is positive, several challenges loom on the horizon. Geopolitical tensions and trade  uncertainties continue to pose risks to cross-border deals. Tariffs and regulatory hurdles can complicate  the integration process and impact the anticipated synergies. Moreover, the increasing scrutiny on data  privacy and cybersecurity are often forcing companies to conduct more thorough due diligence.

Despite these challenges, the opportunities are abundant. The shift towards sustainable manufacturing  practices is opening new avenues for growth. Companies that can innovate in areas such as energy  efficiency, waste reduction, and sustainable sourcing are likely to attract significant investor interest.  Furthermore, the push towards reshoring and regionalization of supply chains is creating opportunities  for localized production and business partnerships.

Where companies should be paying attention

Macroeconomic factors are expected to influence upcoming deal activity, including:

• The US administration’s approach to tariffs and its impact on manufacturing investment, costs, and customer behavior.
• Inflation’s effect on the supply chain, related costs, and Federal Reserve decisions on interest rates, influencing capital costs and financing structures.
• Changes in regulatory policies, particularly antitrust and environmental regulations. This may affect larger deals.
• Energy transition, including government investment shifts or divestment from infrastructure and renewable energy, driving M&A focus.

Strategic considerations for successful deals

For companies looking to navigate this complex landscape, adopting a few strategic considerations can  enhance the likelihood of successful outcomes:

• Embrace technology: The integration of technology should be embedded in each M&A strategy. Whether it’s through acquiring tech startups or investing in digital transformation, companies should make sure they are not left behind in the technology race.
• Enhance due diligence: With heightened risks in cybersecurity and regulatory compliance, companies should undertake thorough due diligence. This goes beyond financial analysis, extending to a detailed evaluation of the target’s technological capabilities and potential  vulnerabilities.
• Adapt to geopolitical changes: Companies should remain agile and responsive to geopolitical shifts. This may involve reevaluating global footprints, diversifying supply chains, and collaborating with policymakers to effectively manage and mitigate risks.
• Focus on integration: Post-merger integration is critical to realizing the overall value of a deal. Companies should have a clear plan for integrating processes, cultures, and technologies from the outset.

Looking ahead

As we look to the future, the industrial manufacturing sector is poised for continued transformation. The  pace of technological change, coupled with evolving consumer demands and regulatory landscapes, can drive increased M&A activity. Companies that can navigate these changes, while leveraging their  strengths and adapting to new challenges, will likely be well-positioned to thrive.

By prioritizing technology and strategic integration, companies can unlock substantial value, drive  growth in an ever-evolving landscape and shape the future of industrial manufacturing.

About the Author:
Michelle Ritchie is PwC’s Global Industrial Manufacturing and Automotive Deals Leader. With 25+ years  of transaction experience, she advises clients on acquisition and divestiture activities, specializing in  aerospace, defense, medical devices, and technology sectors. Michelle’s passion lies in working with  clients to achieve their strategic vision and finding the most direct path to success.

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