(Finance) – In 2023 M&A operations decreased announced in the manufacturing sector worldwide, with -3% compared to 2022 in terms of volumes and -24% regarding values. this is what emerges from “Global and Italian M&A Trends Industrial Manufacturing & Automotive – Trends 2023 and Outlook 2024″ edited by Pwc, according to which last year a greater decline was recorded for deals actually completed (-7% in volumes and -48% in values). THE megadeals announced above $5 billion decreased by 46% compared to 2022. Looking at the various sectors, while the Aerospace & Defense sector moved against the trend (+13% in volumes globally), the Engineering & Construction sector suffered with a contraction of 11%.
As regards the Italian market, M&A deals completed in 2023 in manufacturing fell in a more contained way (-3% in volumes). As stated in the report, the smaller size, the lower exposure to geopolitical tensions and the limited financing problems have rewarded domestic deals, which, in fact, in 2023 represented 63% of the Italian market (inbound 26% and outbound 11%, in line with 2022). Among the best performing sectors in Italy are Aerospace & Defense and Engineering & Construction. Furthermore, 2023 marked an increase in the presence of Private Equity funds in the Italian M&A market (45% of total volumes in 2023 vs 40% in 2022) and investments were mainly concentrated on the Manufacturing and Business Services sectors.
According to Pwc, “a recovery in M&A in the Italian manufacturing sector is expected in 2024 thanks to the partial improvement of the macroeconomic financial situation compared to the previous year. The reduction in inflationary pressures and potentially in interest rates will make the financing of deals less complex larger, positively influencing above all the activity of Private Equity funds which have significant dry powder to invest in Italy”.
According to PwC analysis, “the key aspect of 2024 will be the ability of Italian companies to transform their business model to remain competitive, increase production efficiency, expand their presence on the domestic and international market, and secure a sustainable growth in the long term”.
“Among the main driving factors for the transformation process are the acquisition of technological skills and new technologies, the implementation of solutions for the automation and digitalisation of industrial processes and supply chains, cybersecurity and analysis of data to strengthen predictive maintenance. Furthermore, the strategic optimization of the asset portfolio, the efficiency of the operating model and ESG investments aimed at achieving sustainability objectives in the short term (decarbonisation, energy use renewable energy and electrification of industrial equipment with a strong focus on energy efficiency).
M&A operations will also be a tool to manage uncertainties that may still affect the supply chains and financial problems of some companies. According to PwC’s analysis, numerous restructuring and consolidation operations are expected in 2024 to strengthen companies in difficulty and selective divestments of the portfolio to exit markets deemed no longer of interest for strategic or geopolitical reasons”, reads the report.
Nicola Anzivino, Global & EMEA Industrial Manufacturing and Automotive Deals Leader, Partner PwC Italia: “There are signs of one strong restart of M&A activity in IM&A in Italy, with a focus on the identification of value creation opportunities and on portfolio rationalization and disinvestment processes of assets considered non-core. Transformational M&A will be fundamental in 2024, many industrial operators will look to external growth to increase their automation and robotics skills, with particular attention to the value-added industrial services sector. We expect new M&A opportunities to be created in dynamic sectors that are experiencing rapid advances linked to the energy transition and technological evolution.”