BOSTON, March 13,
2024 /PRNewswire/ -- Capstone Partners, a leading
middle market investment banking firm, released its 2023
Annual Industrials M&A Report, which shares insights
into public market valuations, the macroeconomic climate, merger
and acquisition (M&A) activity, and an outlook for 2024
industry activity. With extensive knowledge and
transaction experience, Capstone Partners' Industrials
Investment Banking Team provides unique commentary on nine key
sectors: Chemicals, Engineered Products, Environmental Health &
Safety, HVAC, Industrial & Environmental Services, Metals &
Metals Processing, Packaging, Precision Manufacturing, and Waste
& Recycling.
Public market valuations in the Industrials industry for 2023
were relatively muted to begin the year, as interest rates rose,
and the prospect of a hard landing caused a continued pullback. By
Q3 2023, public market valuations ticked up to 11.3x EV/EBITDA from
10.9x in Q2 and normalized by the end of Q4 to 11.1x as activity
picked up and uncertainty around the health of the economy abated.
These higher rates forced companies to shift their focus to debt
reduction rather than acquisitions as a heightened rate environment
persisted. The Dow Jones Industrial Average ended the year at
14.7x, capitalizing on upward market trends.
Financial markets and U.S. business owners are hopeful that the
Federal Reserve has guided the U.S. economy to a soft landing with
interest rate cuts on the horizon. Manufacturing demand fluctuated
with the January 2024 Manufacturing
PMI rising 2.0% compared to December, indicating market
contraction, meanwhile new orders grew 5.5% indicating strong end
market demand and a robust overall economy. Despite the year being
plagued with volatility in the markets and input price
fluctuations, the Industrials industry proved to be
recession-resilient with many subsectors outperforming the Dow
Jones Industrial Average YOY. Gross domestic product (GDP) rose
3.3% in Q4 2023 compared to a 1.9% increase in the prior year,
while manufacturers' new orders rose 2.3% YOY. Additionally,
services held up well as the Producers' Price Index (PPI) for final
demand services grew 2.8% YOY.
Inflation trends have cooled but are likely to remain above the
Federal Reserve's 2% target in the near term, while labor markets
have normalized, with unemployment rates remaining steady YOY at
3.7%. The Housing market stalled in 2023, as housing starts fell
8.8% YOY, and existing home sales decreased even more (-19.3%) as
outsized mortgage rates and borrowing costs sidelined buyers.
Activity in the Housing sector is expected to rebound as rates
fall, and pent-up demand for products and services is forecasted to
materialize and drive innovation in the Industrials space,
therefore M&A markets in 2024.
Also included in this report:
- How M&A volumes and public market valuations in the
Industrials industry fared in 2023.
- Which sectors outperformed the broader Industrials industry and
are poised to garner buyer interest in 2024.
- What trends are driving M&A activity across the
Industrials industry and a breakdown of each of the nine
highlighted sectors.
To access to full report, click here.
ABOUT CAPSTONE PARTNERS
For over 20 years, the firm has been a trusted advisor to
leading middle market companies, offering a fully integrated range
of investment banking and financial advisory services uniquely
tailored to help owners, investors, and creditors through each
stage of the company's lifecycle. Capstone's services include
M&A advisory, debt and equity placement, corporate
restructuring, special situations, valuation and fairness opinions
and financial advisory services. Headquartered in Boston, the firm has 175+ professionals in
multiple offices across the U.S. With 12 dedicated industry
groups, Capstone delivers sector-specific expertise through large,
cross-functional teams. Capstone is a subsidiary of
Huntington Bancshares Incorporated (NASDAQ:HBAN). For more
information, visit www.capstonepartners.com.
For More Information Contact:
David Bench
Managing Director, Co-Head of Industrials
949-734-7888
dbench@capstonepartners.com
Ted Polk
Managing Director, Co-Head of Industrials
708-921-8961
tpolk@capstonepartners.com
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SOURCE Capstone Partners