Industrial Technology Report

Bowen has released its Industrial Technology Report focused on the state of fundraising and M&A in H1 2023. The report leverages Bowen’s industry expertise and in-depth capital market knowledge to analyze the current state of M&A and fundraising in the Industrial Technology Market.

Although off 2021 record highs, we expect the M&A and funding environment to finish strong in 2023

• The macro factors that drive funding and M&A for industrial technology companies have not abated
• Strategic buyers, VCs, and private equity firms remain flush with cash
• Bowen’s 1H 2023 closed deals and checks with investors and strategics indicate that quality companies continue to attract interest
• Focus has shifted (back) to more traditional factors when evaluating investments and acquisitions
  • Growth and revenue scale – proxies for a company’s long-term prospects & market demand for its products
  • Profitability and cash efficiency – proxies for building sustainable companies and management discipline
  • Industrial logic – clear rationale that can be modeled into buyer’s return on investment framework

Overall, Valuations Remain Strong

• Putting aside what increasingly appears to have been a bubble in 2021, valuations are above historical norms
  • Our recent transactions and market checks indicate EV / revenue multiples are 1 – 2 turns below the highs of 2021, but by no means are “off a cliff”
  • Public market multiples are a better proxy currently than recent M&A and funding comparables
• 2023 deal activity is likely to look more like a barbell than in the last two years
  • Interest and money likely will flow towards companies that are hitting market adoption, growth & profitability progress metrics
  • Companies with lower growth, <$5M revenue and burn rates >1m per month will have a harder time raising money or exiting at premium valuations in the near term
  • In all cases, management and boards should carefully consider cash burn, focusing on the highest returning investments in customer acquisition and R&D

In addition to our 2023 M&A and Fundraising Outlook, the full report offers:

• Top Trends and Opportunities
• Market Snapshots
  • IoT & Industrial IoT
  • Drones & Industrial Robotics
  • Industrial Analytics & Automation
  • IoT & OT Security
• Top Investors and Strategic Acquirers
• Notable M&A Transactions

Download the full report

Learn more about our Industrial practice