Capstone Partners Reports: Industrials M&A Gains as Industry Players Navigate Shifting Economy

, /PRNewswire/ -- Capstone Partners, a leading middle market investment banking firm, released its 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 2025 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 Manufacturing, Packaging, Precision Manufacturing, and Waste & Recycling. The U.S. Industrials industry navigated a complex macroeconomic environment in 2024, shaped by evolving construction trends, Labor market dynamics, inflationary pressures, monetary policy adjustments, and geopolitical uncertainties. In 2024, the U.S. economy experienced a slight deceleration, with real gross domestic product (GDP) growing 2.8%, down from 2.9% in 2023. This moderation was primarily due to a slowdown in business investment, particularly in equipment spending. Despite this, consumer spending remained a strong driver of economic growth, with Personal Consumption Expenditure (PCE) Price index increasing 5.3% YOY fueled by rising incomes and improving Labor market conditions. The midyear port strikes in key global trading hubs disrupted supply chains and led to higher transportation and logistics costs. These strikes caused delays in the shipment of goods, increased backlogs, and created uncertainty for industries dependent on imports, such as Retail, Manufacturing, and Automotive. As a result, many companies faced inventory shortages, production slowdowns, and increased costs, exposing the overall fragility of global supply chains. The slowdown in inventory accumulations and a decrease in imports partially offset positive contributions to GDP growth from government spending. Construction spending remained a key driver, rising 4.3% YOY to $2.2 trillion, with significant spending from the Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA) fueling demand for roads, bridges, and energy projects, according to the U.S. Census Bureau.1 Private equity firms played an active role in the Industrials M&A market, leveraging uninvested capital to pursue platform and add-on acquisitions. However, geopolitical uncertainties, a strict regulatory environment, and supply chain disruptions continued to influence strategics' M&A decisions within the Industrials industry. Strategic transactions commanded the majority (58.6%) of 2024 deals, while financial buyers prevailed despite difficulties securing debt financing and banks demonstrating caution underwriting large deals. Private equity buyers accounted for 41.4% of deal activity versus 43.7% in 2023. At the same time, sellers were slow to adjust pricing expectations, leading to a valuation gap that stalled transactions. Industrials M&A experienced a shift in valuations, reflecting a dynamic interplay of market forces and bullish investor sentiment. M&A valuations fell compared to the prior year, averaging 9.0x EV/EBITDA. The Dow Jones Industrial Average ended the year at 16.4x EV/EBITDA, up more than a full turn from 2023's average of 14.7x EV/EBITDA, with Engineered Products (18.1x) and HVAC (17.1x) capitalizing on upward market trends and finishing among the top of Capstone's coverage areas' indices. M&A pricing for high-demand segments buoyed the industry as sticky customer bases and accretive innovation transactions provided attractive opportunities for growth and diversification for acquirers. However, cyclical segments like Environmental Health & Safety (11.6x) and commodity-based manufacturing such as Metals (7.5x) and Chemicals (7.3x) faced pressure. Also included in this report: How M&A volumes and public market valuations in the Industrials industry fared in 2024. Which sectors outperformed the broader Industrials industry and are poised to garner buyer interest in 2025. A message from Capstone Partners' Co-Heads of Industrials Investment Banking and 2025 Industrials and North America M&A Expectations from Capstone's 2024 Middle Market Business Owners Survey. 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. SOURCE Capstone Partners WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM? 440k+ Newsrooms & Influencers 9k+ Digital Media Outlets 270k+ Journalists Opted In

Capstone Partners Reports: Industrials M&A Gains as Industry Players Navigate Shifting Economy

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