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  "documentTitle": "Discrete (Factory) Automation",
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  "authorName": "Harris Williams / L.E.K.",
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      "text": "We expect an increased level of M&A activity in the discrete automation space over the next 12-18 months (depending on geopolitical developments) driven by increased investments across applications and integrators.",
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      "text": "Even though the COVID-19 impact on overall M&A activity in discrete automation seems negligible, taking a detailed look reveals that there were both positive and negative impacts on the sub-sectors. Automation Software and component and module manufacturers saw a significant increase in transactions, while PLCs and machine builders were not able to benefit.\nBeside strategic investors, there remains a growing interest from private equity in the discrete automation space with around 25% of all transactions ending up with financial buyers. While some sub-sectors seem to be less interesting for financial investors, we observe strong interest in robotics, as almost 40% of all transactions are led by financial buyers (incl. add-on acquisitions).\nInnovative software providers are in high demand as market participants are looking to add related software modules to their hardware offering to provide a holistic offering for factory automation solutions, while deeply embedding themselves in customers' operations and increasing cost of change.\nWe expect an increased level of M&A activity in the discrete automation space over the next 12-18 months (depending on geopolitical developments) driven by increased investments across applications and integrators. Strongly emerging interest from private equity investors to invest in market leaders and hidden champions will continue.\nAdditionally, there are some premium sponsor-backed automation platforms of scale expected to come to market, which are ideally positioned for further inorganic growth strategies with a new owner.\nDiscrete automation companies' valuation levels have continuously increased over the last decade with current valuation levels between 12-18x EBITDA, depending on the sub-sector. Generally, machine builders and integrators are trading below component and module manufacturers. Software solutions are currently valued the highest. For the right asset, valuations can vastly exceed the range listed above.",
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