Q1 2024 Industrials Market Overview
M&A activity in the Industrial sector decreased by 18% in Q1 with 114 transactions after an active Q4. This was led by the Electronics & Components subsector with 36 transactions in Q1 2024 (32% of all deals).
Both Strategics and Private Equity firms balanced risk management with opportunistic appetites amidst slowly improving economic outlooks.
Industrial manufacturers remained hyper-focused on supply chain and operational efficiency to navigate economic uncertainty. Many manufacturers have shifted their industrial production to domestic manufacturing in efforts to onshore and control more of their supply chains. Other manufacturers have looked to M&A as the solution to bolster supply chains and improve margins through highly synergistic acquisitions.
Looking forward, Industrial manufacturers are targeting technology and sustainable manufacturing solutions to grow bottom lines and future market share.
Manufacturers are starting to construct and renovate factories and successful implementation of Smart Factories will allow Industrial companies to increase production output, steer more cost-efficient processes, and operate sustainable manufacturing systems.
A strong first quarter performance in public markets led to strong increases in valuation multiple – In Q1 2024, the average EV / EBITDA multiple grew by 10% to 14.3x (from 13.1x in Q4 2023).
Bankruptcy Trends:
142 companies filed for bankruptcy in Q1, up 7% from 133 filings in Q4
While Q1 bankruptcy filings increased from the prior quarter, Q1 corporate bankruptcies decreased by -20% on a year over year basis (Q1 2023 featured 180 corporate bankruptcies).
On a trailing twelve month basis, 616 corporate bankruptcies occurred (up 30% from 475 in the TTM Q1 2023 period).
The Industrial subsector continued to see among the most bankruptcy filings out of all sectors. 18 industrial manufacturers filed for bankruptcy in Q1, representing the third highest behind Consumer Discretionary and Healthcare.
In among the largest bankruptcies of 2024, Enviva Inc., the largest producer of wood pellet and biomass producer, filed for Chapter 11 bankruptcy in March with ~$2.6B in debt.