Industrial Technology
Q3 INDUSTRIAL TECH SUMMARY & OUTLOOK
M&A activity remains robust across the Industrial Technology sector as companies and investors search for innovative capabilities to address vulnerabilities brought on by the COVID-19 pandemic. Building on the momentum of the first half of 2021 , deal volume accelerated, with 100+ deals completed in Q3 2021 . Venture investments also accelerated in Q3 2021 as investors respond to the intensified need for automation and digitalization to strengthen supply chains. While M&A activity presses forward as companies take advantage of macroeconomic tailwinds and access to capital, industrial companies cope with various pressures.
A Myriad of Pressures Challenge Industrial Sector
Despite an improving macroeconomic backdrop, industrial companies continue to face a challenging landscape Pent-up demand for material goods amid significant global supply chain bottlenecks fuel inflationary pressures. Pressures extend beyond raw material costs – a severe shortage of semiconductors and chips paralyzed production in the automotive sector, costing the sector an estimated $210 billion. (1) Additionally, supply chain bottlenecks – marked by clogged rail yards and record-breaking port congestion – coupled with soaring gas prices resulted in historically high shipping and handling costs. According to Transportation Insights, “Everything that is moving is moving at a premium and moving with surcharges.”(2) While global supply chain bottlenecks and the semiconductor shortage likely won’t end in the near term, policymakers and CEOs continue to evaluate if inflationary pressures are transitory or a structural shift.
Industrial Companies Face A Shortage of Skilled Labor
The COVID-19 pandemic erased over a decade of job gains in the manufacturing sector, eliminating more than 1.4 million positions. (3) Despite near record job openings in the sector, US manufacturers struggle to fill vacant roles A defining aspect of the shortage is the lack of available skilled labor. Many manufacturing jobs require applied skills, technical training, or licensing and certification; these roles are becoming increasingly difficult to fill as baby boomers retire and new market entrants hold different career expectations. Many industrial companies have prioritized recruiting, talent training, and pipeline management efforts in the wake of the pandemic, adding to the growth in the Human Capital Management space. For more information on the labor shortage across all industries, please see Harbor View Advisor’s Human Capital Management Q3 2021 Report.
M&A Activity Marches Onwards
Challenges brought on by the pandemic expose significant vulnerabilities in various areas, including supply chain visibility, end -market exposure, and talent pipeline strength. Finding solutions to mitigate these pressures represents a strategic imperative for both industrial companies and investors alike. Through acquisitions and consolidations, companies can acquire new technology to automate processes, strengthen stretched supply chains, and gain the ability to quickly pivot product offerings. As we look to Q4 2021 and 2022, industrial M&A activity is expected to remain robust as dealmakers capitalize on macroeconomic tailwinds and opportunities for growth and innovation
KEY ECONOMIC INDICATORS
Source: Board of Governors of the Federal Reserve System
Source: U.S. Bureau of Labor Statistics
Source: U.S. Bureau of Labor Statistics
Source: Board of Governors of the Federal Reserve System
$500,000 $600,000 $700,000 $800,000 $900,000
$400,000
$300,000
INDUSTRIAL TECH PUBLIC MARKETS
Source: Pitchbook, Data as of September 2021 TTM
INDUSTRIAL TECH PUBLIC TRADING STATISTICS
HARBOR VIEW’S INDUSTRIAL TECH SUB-SECTORS
AUTOMATED SOLUTIONS
• Robotics
• Specialty Equipment & Devices
• Sensors / Controls
• IIoT / Related Technologies
• Manufacturing
• Value-Added Distribution
• Installation & Construction
• Products & Components
AUTOMATED SOLUTIONS
• Design & Engineering
• Test & Measurement
• Logistics Services
• Facility & Site Services
• Recruitment
• Staffing, Training and Education
• Certification & Compliance
• Workplace Safety
INDUSTRIAL TECH PUBLIC TRADING STATISTICS
TRADITIONAL INDUSTRIALS
INDUSTRIAL STAFFING & WORKPLACE SAFETY
INDUSTRIAL CONGLOMERATES
INDUSTRIAL TECH M&A TRANSACTIONS
AUTOMATED SOLUTIONS
INDUSTRIAL & RELATED SERVICES
INDUSTRIAL STAFFING & WORKPLACE SAFETY
TRADITIONAL INDUSTRIALS M&A TRANSACTIONS
TRADITIONAL INDUSTRIALS
INDUSTRIAL TECH FINANCING TRANSACTIONS
$6M SEPT 2021
$12M JAN 2021
$30M JUL 2021
$150M AUG 2021
$100M JULY 2021
$100M OCT 2021
$75M JUL 2021
RECORD FINANCING YEAR
Investments in Industrial Tech start-ups reach record levels in 2021
$17M JAN 2021
INDUSTRIAL TECH VENTURE CAPITAL ACTIVITY
DEAL SPOTLIGHT
ALDEN RESEARCH LABORATORY ACQUIRED
BY RTC PARTNERS
Acquired by
SEPTEMBER 20TH, 2021, HOLDEN, MA – Alden Research Laboratory, Inc. (“Alden”), the oldest continuously operating hydraulic laboratory in North America has joined National Environmental Consulting Services (NECS), Round Table Capital’s (RTC’s) sponsored national platform of companies focused in the industrial, real estate, energy, technology, water resources, transportation, and government sectors with professional staff and complementary capabilities across the US.
Alden offers a combined 127-year history of high-end Computational Fluid Dynamics (CFD) and fluid flow modeling, best in class physical modeling, field measurements and precision flow meter calibrations with extensive national and international experience in the modeling and permitting of hydroelectric dams, nuclear facilities and coastal and riverine modeling and environmental compliance projects found throughout the United States.
Gerry Salontai, CEO of the platform, explained, “It is immediately clear how the addition of Alden to the NECS platform will bring added value and success to the clients we serve across the US. I share the excitement of all platform employees in welcoming Alden’s uniquely capable leadership and technical professionals to the team ”
As Stuart Cain, Ph.D., President of Alden explains, “We believe this strategic next step in joining the platform enhances our technical and geographical breadth and provides career growth opportunities for our team members. I look forward to adding our expertise to the platform and building deeper relationships with our current and future clients ”
This is RTC’s third buy and build strategy in the Architecture, Engineering, and Construction industry. Christopher Lee, Managing Partner and member of the founding team at RTC said, “We are very pleased to welcome the entire Alden team to the platform. The strategic addition of such a strong organization is a win for all stakeholders; it provides additional opportunities for employees, enhances the service offering to clients, and creates value for shareholders ”
Harbor View Advisors served as the exclusive financial advisor to Alden Research Laboratory. Learn more about this transaction and view the full press release.
INDUSTRIAL INSIGHTS
KEY TAKEAWAYS FROM FABTECH CONFERENCE
In September, Harbor View Advisors attended FABTECH 2021 – North America’s largest metal forming, fabricating, welding and finishing event. At the event, Harbor View’s Industrial Technology team met with business leaders and attended content sessions. Our key takeaways from the event are outlined below:
Workforce development sessions were particularly well attended as industry leaders navigate the widespread labor shortage and consider how to recruit and retain a younger workforce as baby boomers retire.
IoT implementation can create a cultural shift; small businesses must remain agile by adapting small components of automation at a time, noting employee and customer feedback, and adjusting processes accordingly.
Automation can unite various systems and machines (even if they’re from different manufacturers), promote connectivity and visibility throughout the supply chain, prevent mistakes, and identify parts and processes that are effective or ineffective.
Manufacturers must be concrete about what real data points are driving their business; understanding how to utilize analytics from machining systems is essential and can help shift or pivot when the business need arises.
INDUSTRIAL TECH EXPERTISE
BROAD & DEEP INDUSTRIAL TECH INDUSTRY EXPERTISE
MODELING & PROJECT MANAGEMENT
MATERIALS, INSTRUMENTS & COMPONENTS
PROCESS TECHNOLOGY
CONSTRUCTION, FIELD SERVICES & MAINTENANCE
SENSORS, SOFTWARE & CONTROLS
ROBOTICS
Telecommunications Provider Acquired by
STRATEGIC BUYER
Solar Lighting Design & Engineer Acquired by
STRATEGIC BUYER
Metal Processor Acquired by
Auto Dealer Supplier Received an Investment from
STRATEGIC BUYER FINANCIAL SPONSOR
TEST, INSPECTION & CERTIFICATION
DESIGN & MATERIALS ANALYSIS
Metal Fabricator Acquired by
STRATEGIC BUYER
Utilities Data Analysis Provider Acquired by STRATEGIC BUYER
Aerospace Component Testing Provider Acquired by STRATEGIC BUYER
Recycling Solutions Provider VALUATION ANALYSIS
SAFETY, TRAINING & EDUCATION
TEST & MEASUREMENT PRODUCTS
Telecommunications Provider Acquired by
STRATEGIC BUYER
Property Management Provider
STRATEGIC ADVISORY SERVICES
Note: Unless displayed with the Harbor View logo, the transactions documented were executed in previous roles
INDUSTRIAL TECH TEAM
Nate Shepherd
MANAGING DIRECTOR
Erica Richardson ASSOCIATE
WORKPLACE SAFETY
Fire Safety & Training Provider
MANAGEMENT BUYOUT
Fluid Dynamics and Modeling Provider
STRATEGIC BUYER Acquired by
The material in this report is for information purposes only and is not intended to be relied upon as financial, accounting, tax, legal or other professional advice. This report does not constitute and should not be construed as soliciting or offering any investment or other transaction, identifying securities for you to purchase or offer to purchase, or recommending the acquisition or disposition of any investment Harbor view advisors does not guarantee the accuracy or reliability of any data provided from third party resources Although we endeavor to provide accurate information from third party sources, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future