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Industrial deal-making slows in 2023 but looks stable in the second half

Aug. 25, 2023
PwC report shows mergers and acquisitions slowdown from recession concerns, the war in Ukraine and higher interest rates. However, companies continue to pursue strategic deals to build out capabilities.

Last year (2022) ended with a handful of large deals in the industrial manufacturing sector. Industry leaders in 2023 are facing headwinds from macroeconomic factors. Factors such as the war in Ukraine, recession concerns, inflation, energy costs and interest rates continue to affect businesses and growth projections. In the first half of the year, we continue to see a steady level of deal activity as companies seek new capabilities in an effort to gain strategic advantage and drive investment opportunities.

Market challenges are renewing the focus on portfolio and strategic reviews. Based on findings from PwC’s US Deals 2023 midyear outlook, we expect M&A activity in the second half of 2023 to be stable, largely driven by focused deals as companies seek acquisitions to build out strategic gaps, including digital investments. These digital investments enable a range of possibilities – from using AI and automation to mitigate supply chain risks, to the expansion of technical capabilities to streamline testing and quality reviews.

CEOs are also turning to transformative acquisitions to reinvent and future-proof their businesses. Divesting of non-core assets after portfolio optimization is driving transformation. Some industry leaders discovered the secret sauce when it comes to making successful, transformative deals; leverage industry experience, invest in integration, and commit to the creation and implementation of new, long-term operating models.

As the industrial manufacturing market looks toward the second half of 2023, we expect industry leaders to continue making investments in acquisitions and technology to remain competitive, while considering divestitures to reinvent their organizations for long-term success.

About the Author

Michelle Ritchie

As PwC’s U.S. Industrial Products Deals Leader, Ritchie advises clients on acquisition and divestiture activities. She worked exclusively on transactions for 20+ years, from large, multinational transactions to smaller bolt-ons, scaling the advice to match the transaction.