The Blueprint – August 2021 Edition – 7 Mile Advisors
By Lexi Papa | August 31, 2021
The Blueprint – August 2021
Given the competitive nature of the Manufacturing industry, automation as an integrated capability has transitioned from a futuristic tool to an urgent necessity for enterprises. And yet, many companies have been reluctant to enact these changes due to implementation costs and technological challenges. Easy-to-integrate robots and automation software platforms, which can effortlessly adapt to the production environment and be flexible based on the manufacturer’s needs, are providing a solution to these challenges. New robots can now be trained by the employees in just a few hours and automate tasks that were too complex or expensive when using older technology or manpower. A relevant example is the robot MIRAI, which can independently copy and integrate variances in real-time. The key advantage of this technology is its enablement of robots to learn through demonstration, promptly. This technology allows small businesses to stay competitive and increase margins from efficiency-driven cost saving, and is affordable to most as the relative technology investment required is decreasing, contributing to an average ROI of less than 12 months.
Optimizing manufacturing processes through automation is increasingly important as global challenges for production and supply-chain operations have emerged amid the pandemic. Consequently, digital transformation has become an urgent priority for nearly every manufacturer. According to IBM, two-thirds of manufacturers have accelerated their integration of digital technologies, particularly in technologies that facilitate remote learning. Additionally, as a response to the supply-chain crisis that affected businesses in almost every industry, many manufacturers opted to reshore their supply sources.
According to Paulo De Matos, the Chief Product Officer of SYSPRO, companies need to engage in dual sourcing to increase their resilience in front of supply-chain challenges. Since this process can be complex, digital technologies are essential to assuring the success of the operations. Additionally, both manufacturers and distributors need to be more in touch with their customers in real-time and become more adaptable. Meaningful data has proven to be a necessary tool for manufacturers to stay connected and therefore, competitive. As demonstrated by the pandemic, businesses with well-developed production automation and technology-enabled manufacturing and supply-chain logistics were able to not only survive in 2020, but also outperformed their competitors. Enterprises that continue to lag in adapting will find it increasingly difficult to catch up in the current environment. For businesses that are looking to grow organically, it is crucial to invest in digital transformation.
Industrial Automation stock performance measured by 7MA’s sector index has demonstrated momentum surpassing that of the broader market since July 2021. Since the end of October, the overall market and the Industrial Automation index have risen sharply amid vaccination news, recovery efforts, and a positive outlook for the global economy. Industrial Automation stocks have continued to rise so far in 2021 and are hovering close to 40% higher than last August. Revenue multiples have stayed in between 6x – 7x since January and are currently around 6x. EBITDA multiples have been around 25x since January of this year.
The best articles from around the web for AEC industry leaders.
- One Hour Makes All the Difference: Automate Quickly and Effectively With AI via Manufacturing Tomorrow
- Is Now the Time for Manufacturers to Accelerate the Digital Transformation Process? via Manufacturing Tomorrow
- Top Industrial Uses Case for Cloud Computing via Automation World
Insights and intelligence on recent notable industry transactions.
- The Timken Company, a maker of engineered bearings and power transmission products, acquired Intelligent Machine Solutions, a builder of industrial robotics and automation solutions. The addition of iMS expands and complements Timken’s Rollon linear motion product range with larger and heavy-duty applications, such as seventh-axis robotic transfer units (RTUs) and gantry systems. iMS will increase Rollon’s leadership in robotics and automation and in new and growing end-market sectors, such as Packaging and Marine, as well as Aerospace and Automotive Production Plants.
- Sole Source Capital, an industrial-focused private equity firm, and its portfolio company Supply Chain Services, a provider of automatic identification and data capture and factory automation solutions to customers across North America, have acquired ISG Technologies. The acquisition of ISG Technologies will add to Supply Chain Service’s product line and will expand its geographic reach into Texas. This is the fourth add-on transaction supported by Sole Source Capital, following the purchases of Dasco Label, Miles Data, and Coridian since Supply Chain Services was acquired in May 2020.
- ABB announced it will acquire ASTI Mobile Robotics Group, an autonomous mobile robot manufacturer with a broad portfolio across all major applications enabled by the company’s software suite. This will expand ABB’s robotics and automation offering, making it the only company to offer a complete portfolio for the next generation of flexible automation. Sami Atiya, president of ABB’s Robotics & Discrete Automation business, said, “With this acquisition, ABB will be the only company to offer a full automation portfolio of AMRs, robots and machine automation solutions, from production to logistics to point of consumption. This is a gamechanger for our customers as they adapt to the individualized consumer and seize opportunities presented by significant changes in consumer demand.” AMRs will support an unprecedented degree of flexibility, from production, logistics, intralogistics, and fulfillment through to retail and healthcare environments.
See our latest Sectorwatch research reports for a comprehensive list of AEC industry M&A activity and valuation trends.
About 7 Mile Advisors
7MA provides specialized Investment Banking & Advisory Services to the professional service firms in the Consumer Products & Retail industries. We help our clients determine the right strategic partners for their businesses, transition ownership, raise capital, grow through acquisitions, and evaluate new markets. We advise our clients on M&A and private capital transactions, and provide unique market insights. Our team brings experience and energy to all of our engagements, with a focus on helping our clients navigate a changing marketplace.
To learn more about how 7 Mile Advisors can help you evaluate and execute on strategic M&A or private capital alternatives for your business, please visit our website www.7mileadvisors.com.