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October 2021

Market Update: Industrial Automation & IoT – Q3 2021


The current challenges impacting the manufacturing and supply chain logistics environment are highlighting the need for operators to improve efficiency, productivity, and their agility to respond real-time to changes in operating environments. As a result, Industrial Automation and IoT capabilities are proving to be focus-areas of continued investment.

Within batch, discrete, and continuous process industries, IoT platform-software and data acquisition & analytics are trending as top areas of investment, driven by demand for the agility to respond to real-time changes in manufacturing and operating environments and derive insights that will inform day-to-day decisions. Cybersecurity is expected to continue as a major area of spending as recent highly-pervasive and public cyber-attacks have highlighted the importance of strong protection of IT infrastructures across all industries. These spending trends suggest that decision-makers are currently prioritizing investment in advanced process automation and data-centric initiatives in the digital transformation journey of their organizations.

Industrial Automation stock performance measured by 7MA’s sector index has grown approximately 30% over the last twelve months, outperforming the broader market until September of this year. Investor concerns around ongoing and impending supply chain bottlenecks around the holiday season have influenced a recent lag in the sector, however, the index has seen a rebound in October as concerns around the U.S. government debt ceiling have eased. The companies tracked in 7MA’s sector index are currently trading at an average of 5.8x revenue and 23.8x EBITDA, both below their last twelve-month highs of 6.7x and 26.6x, respectively.

7MA has recently completed several M&A transactions for companies with Industrial Automation & IoT products, software platforms, and service offerings and has developed unparalleled deal expertise and knowledge of the industry trends, valuation trends, and most active strategic and financial buyers. Please contact Leroy Davis, Sydney Scadden, or Conor Smith, or Tyler Ratterree if you would like to learn more about Industrial Automation & IoT.

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