The machinery manufacturing industry builds industrial and heavyweight machinery for automotive, aerospace, agricultural, construction, oil & gas, mining and other manufacturing industries. Players in the industry also manufacture plants, assembly lines, engines, turbines, original equipment, and intermediate components for other heavy duty machinery manufacturers. Key suppliers include iron and steel manufacturers; manufacturers and wholesalers of plastics, rubbers and forged metal products. The machinery manufacturing industry is currently in its mature stage. The Canadian machinery manufacturing industry faces a moderate level of regulation. The industry is cyclical and depends on macroeconomic factors such as commodity prices, interest rates, corporate profits and consumer discretionary income. In the last decade, the industry has witnessed heightened M&A activity as larger players seek consolidation to improve margins. Technology and automation plays a key role in this industry as players seek to differentiate themselves from competition by enhancing quality standards.
Technological Developments: companies in the industry gain a competitive advantage by using state-of-the-art technology to increase production efficiency, reduce costs and deliver higher quality products.
Sustainability: There is a strong trend to develop industrial machines that are more environmentally friendly. Environmental regulations are becoming more stringent as technology improves and the phenomenon of climate change gains acceptance. In addition, companies want to build a good brand image by appealing to consumers’ increasing sustainability awareness, and this reflects in the more innovative technology and equipment that they adopt.
Selling a Machinery Company
As many companies reshape their portfolios in the face of evolving industry dynamics, M&A deal values in the industrial machinery manufacturing sector have jumped to decade highs during the pandemic. As Canada’s leading private market M&A Advisory firm, Beacon understands that selling a business is an important decision. A dedicated business owner not only seeks to extract maximum value from the sale of a business but also seeks to sell the business to a competent buyer who can continue the company’s legacy. Beacon has worked on valuation and M&A advisory mandates in the entertainment industry, bringing extensive experience in deal negotiation to the table. Our experienced advisory team will assist your business in navigating the entire sell-side M&A process.
As an entrepreneur or business owner who is exploring a potential sale, it is important to understand some key factors specific to the machinery industry that might impact the likelihood of a potential sale. These are factors that determine business attractiveness for potential buyers and investors.
Asset and Equipment Management – Machinery manufacturing companies require heavy assets and equipment to operate. As such, efficient equipment and asset management is key for the successful operation of a business in the machinery manufacturing industry.
Wage – The expertise of the workers is one of the most valuable machinery manufacturing companies hire workers for the production assembly lines. Businesses in this industry tend to spend a sizable amount of their revenues on wages.
Technological Innovations – Due to little product differentiation, businesses gain a competitive advantage by increasing production efficiency, reducing costs, and providing higher quality products. These activities can sometimes translate into higher R&D expenses on the companies’ income statements.
With 140 years of combined experience serving businesses within Toronto, Ontario, and abroad, the Beacon transaction team has extensive knowledge and experience successfully working for several machinery companies from a variety of industries. Whether it be a valuation or sale, our team can provide expertise and resources found only at larger corporations, paired with the personalized touch of our M&A Advisory team. Contact us today to get in touch with one of our advisors.