Exit and Growth Strategies for Middle Market Businesses

Archive for the ‘Metal Fabrication’ Category

M&A News from the Metal Fabrication Industry

By Robert Contaldo | Apr 17, 2015

Metal Fab EtchingM&A activity in the metal fabrication space has been driven by the growth in employment, construction projects and increased manufacturing. In particular, growing demand for aluminum products across a variety of end markets is driving component sales making aluminum fabricators highly attractive M&A targets to acquirers looking to be vertically integrated.

According to First Research, an industry research organization, US industrial production of fabricated metal products increased about 4 percent in December 2014 compared to the same period a year earlier. Forgings and stampings saw some of the largest gains, with growth of more than 10 percent. Improving US construction spending likely contributed to a 6 percent increase in architectural and structural metals production. Fabricated metal product manufacturers also likely benefited from increased production in some key end-use OEM markets. US machinery production rose 12 percent in December 2014, and production of motor vehicles and parts grew 7 percent. Production of aerospace products and parts increased about 4 percent.

US manufacturing activity, a key demand indicator for industrial supply wholesalers, rose for the 17th consecutive month in October 2014, according to the Institute for Supply Management (ISM). Of the 18 manufacturing industries reporting to the ISM, 16 reported growth in October. Industries experiencing the strongest growth included makers of plastic and rubber products, textile mills, fabricated metal products, primary metals, electrical equipment, appliances and components, and nonmetallic mineral products. Overall, manufacturers reported faster growth in production, new orders, and employment.

Posted by Robert Contaldo.

Read the Entire Metal Fabrication 1st Quarter Newsletter Here

News From the Metal Fabrication Industry

By Robert Contaldo | Dec 19, 2014

TurbineDespite increased demands for steel from end-use industries such as automotive, construction, and energy sectors, steel production has declined globally. Simultaneously, steel prices have remained weak; further declines in prices are expected as demand growth flattens. A positive note from this is the decrease in iron ore prices, which could lower production costs for steel makers. Also, demand for aluminum has increased, showing that the surplus in capacity may end soon. This is partly driven by the increased use of lightweight alloys in automobiles and aircrafts.

Strong growth in the United States GDP (4.6 percent in the second quarter) combined with improvements in key end-use sectors such as automotive and construction, should drive increased demand, leading to a need for increased capacity.


Read the Entire Metal Fabrication 4th Quarter Newsletter Here

Q3 Metal Fabrication M&A Industry Report

By Catherine Patience | Oct 10, 2014

MFIPG-Metal PartM&A activity in the metal fabrication sector for North American based target companies in Q2 2014 included 16 closed deals, according to data provided by S&P Capital IQ. The deal environment in the metal sector has rebounded over a slow first quarter, according to a report from international consulting firm PricewaterhouseCoopers. As smaller machine shops struggle to stay viable, operators with strong cash reserves are likely to take advantage by buying up assets and using scale to focus productivity on higher-margin capacity.

Read the Entire Metal Fabrication M&A 3rd Quarter Newsletter Here

Q2 Metal Fabrication Mergers & Acquisitions Update

By Catherine Patience | Jun 13, 2014

MFIPG-Metal Welding,VerticalM&A activity in the Metal Fabrication sector for North American based target companies in Q1 2014 included 14 closed deals according to data provided by S&P Capital IQ. A lot of the activity was driven by consolidation plays as companies look to enhance their service offerings to gain market share. As the economy continues to rebound and manufacturing and homebuilding regain momentum, M&A activity should continue to vault forward.

Read the Entire Metal Fabrication 2nd Quarter Newsletter Here

Metal Fabrication Q1 M&A Update

By Kim Levin | Apr 04, 2014

Wire ThreadersM&A activity in the North American Metal Fabrication sector for Q4 2013 through February 10, 2014 included 36 deals announced or closed according to data provided by S&P Capital IQ. Deal volume has been relatively flat in the space over the past 24 months as steel purchasers exercise caution with topsy-turvy demand domestically. According to a report from industry research group First Research, US orders for durable goods, a key demand indicator for metal wholesalers, increased nearly 5 percent in the first 10 months of 2013 compared to the same period a year earlier. Overall, new orders for primary metals increased more than 3 percent. New orders at US iron and steel mills fell 6 percent, but orders for aluminum and other nonferrous metals rose about 14 percent. With the construction market slowly improving demand is expected to increase throughout 2014, which should relate to an uptick in M&A activity.

Read the Entire Metal Fabrication 1st Quarter Newsletter Here

Metal Fabrication M&A Industry Update

By Kim Levin | Jan 24, 2014

MFIPG-Metal Welding,HorizontalDormancy presided over Q3 M&A activity in the Metal Fabrication sector. This came amidst surges within other industrial manufacturing industries. Operations in this industry center around bending, stamping, and machining for specialized applications. Metal part fabricators utilize ferrous and nonferrous metals like carbon, alloy and stainless steels, aluminum, titanium, brass, copper, and various alloys. These may come in sheets, bars, coils, etc.


Read the Entire Metal Fabrication 4th Quarter Newsletter Here

Metal Fabrication M&A Update

By Kim Levin | Nov 01, 2013

MFIPG-Metal PartM&A activity in the metal fabrication space continued on an upward trend in 2012, finishing the year with 38 transactions in the 4th quarter alone. Over the last 36 months, we have seen aggregate deal values rise with increasing leverage while equity contributions are on the decline.  As cited in a report by Capstone Partners, the jump in M&A activity in 2012’s 4th quarter can be attributed to closing transactions strategically before tax hikes were implemented in January 2013. Though tax effects had a strong role, consolidation in metal fabrication has benefited from increasing demand in a recovering economy as well as healthy balance sheets for strategic buyers. Companies are now looking to take advantage of improving economic conditions through acquisitions in the sector. Middle market M&A activity in the industry has been mainly driven by strategic acquirers who have continued to drive up multiples and valuations. As Brown Gibbons Lang & Company notes in their “Metals Insider” Report, Private equity groups have hesitated to be involved in companies with less than $250 million EBITDA, as their main interest is large companies with stable cash flows. Nevertheless, private equity firms have high amounts of un-invested cash and are attracted to the sector’s consistent demand and growth, while they are also intrigued by opportunities for consolidation.

Read the Entire Metal Fabrication 3rd Quarter Newsletter Here