Manufacturing industry has been classified into industry verticals such as food processing, pharmaceuticals, textiles, automobiles, plastics, electronics and more. The United States is the world’s second largest manufacturer in the world.
The Small and Medium Enterprises (SMEs) have key importance in the US economy. There is a general tendency among large manufacturers to migrate under-developed countries to leverage the benefit of low labor cost. The merger and acquisition (M&A) activities among the SMEs are driven by expansion of the business geographically. More acquisitions deals are going to happen in the forthcoming years in the SMEs sector to survive in the saturated market.
Advanced manufacturing industries are likely to use mergers and acquisition activities more than others to add technology to their products. They also search for right resources in the tightening labor markets and like to enter new markets. These driving factors should continue to carry merger and acquisition activity in advanced manufacturing, despite the geopolitical uncertainty, including the current trade battle between the US and China and rising interest rates.
The business advisors related to mergers and acquisition segment have listed out major reasons for buying or selling business as follows:
1. To increase the scalability and resources
2. Attractive opportunities in the business deals and/or flexible offers from strategic buyers
3. Hesitating to wait for next economic upturn
4. Industry realignment which influences growth and investment strategies
The major growth driver for merger & acquisition deals is to expand customer base in existing geographic markets and expand/diversify products or services. Other important drivers of M&A deals are;
– Opportunity to acquire technology
– Option to improve revenue
– Improved cash flow
– Change in Liquidity
– Changes in, tax legislation
– Regulatory Issues
M&A activities in manufacturing sector shows positive trends in the upcoming years with more deals are likely to happen due to above factors.
Keystone Business Advisors provides business advisory services to buy a business, sell a business and M&A deals in the manufacturing sector.
The companies in the manufacturing industry continue to face multiple challenges due to the re-focus on technologies and power sources. Keystone Business Advisors provide solutions based on our understanding on the industry, and our networking strength in the industry.