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September 26, 2023 | Insights

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

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