GCG’s Q3 2022 Industrials Industry Update provides an overview of the latest trends in the sector, including recent performance, valuation multiples, and the state of the middle-market M&A environment.
Key findings include the following:
- The Industrials sector experienced mixed results in the performance of public equities during Q3 2022, with some segments up slightly, and some down slightly. Compared to the overall market though, half of the segments that GCG tracks outperformed the overall market, while the other half underperformed. It seems clear that the market is still pricing in some level of continued disruptions in supply chains, along with higher-than-normal freight costs and ongoing labor challenges into the future. However, we believe investors are starting to form a more positive outlook on the sector as a whole, as some of these factors are beginning to stabilize across various segments.
- The volume of M&A activity in the Industrials sector during the third quarter declined slightly with 246 closed transactions, compared to 264 during Q2 2022. Average deal value (based on reported transaction value) was relatively consistent with the prior quarter level as well, signaling that strong activity across the middle market has continued.
- The General Industrial Manufacturing category continued to lead M&A activity, accounting for 24.8% of total transaction volume. Polymers, Chemicals & Plastics Manufacturing represented the second most active segment, accounting for 19.5% of transaction volume.
- Based on a representative set of publicly traded companies in the Industrials sector, public companies traded at an average multiple of 11.0x EBITDA and 1.7x Revenue.
Click here for the full update.