Year-to-date metal forming merger and acquisition (M&A) activity has continued at last year’s frenetic pace. Supported by accommodating debt markets, private equity buyers have dominated M&A activity in 2019. Valuations for target companies have been consistently strong over the past several years. Meanwhile, public company valuations have rebounded slightly from year-end 2018 despite volatile equity market conditions.
Last year saw a record 124 announced metal forming M&A transactions. Robust activity has continued in 2019 with 90 transactions announced year-to-date. Private equity buyers have dominated M&A in 2019 accounting for two-thirds of deals. Activity has been particularly strong in the Aerospace, Building/Infrastructure, and Industrial sectors.
Mean and median enterprise value-to-EBITDA (EV/EBITDA) multiples over the past five years were 8.4x and 7.6x, respectively. Aerospace and Medical targets have generally achieved higher valuations than other metal forming sectors. Notable transactions announced in 2019 include:
Public company valuations and margins have remained strong despite metal price volatility and broader economic concerns. The Aerospace, Building/Infrastructure, and Medical sectors have fared particularly well while Automotive and Industrial valuations have compressed slightly over the past several years. Oil & Gas valuations spiked in 2016 and 2017 as earnings and margins contracted – both margins and valuations have since normalized.
Public company share prices for most metal forming sectors are below levels achieved five years ago, except for the Building/Infrastructure and Medical sectors. The Aerospace and Industrial sector indices have retreated to December 2015 levels while the Automotive index is at a five-year low. Publicly traded Oil & Gas companies have experienced the largest declines as energy prices remain well below 2014 highs.
This industry update analyzes Stout’s custom public company indices and proprietary M&A transaction database of North American metal forming transactions. Targeted companies include casting, extrusion, finishing, forging, machining, stamping, and various other processing and fabrication businesses across a wide range of end markets.