Lincoln International Posts Q1 EMS M&A Activity Report
Lincoln International, an investment banking advisor firm, released its quarterly summary of M&A activity in the global EMS sector.
According to the report, there were seven EMS transactions recorded in Q1 2022, representing the same amount and level of activity that was recorded in Q1 2021.
EMS consolidations accounted for five transactions in Q1 2022, or approximately 71% of total EMS activity and represents a slight decrease in the number of EMS consolidations compared to Q4 2021.
There was one vertical / horizontal convergence transaction and one private equity (PE) investment transaction recorded in Q1 2022, each representing 14% of total activity. Original equipment manufacturer (OEM) divestitures did not account for any transactions in Q1 2022, nor were there any transactions categorized as diversification into EMS or EMS divestitures this quarter.
In terms of geography, four of the transactions that were completed in Q1 2022 occurred in the U.S. / Canada. This represented 57% of the total transaction activity in Q1 2022. In Europe, three transactions were completed in Q1 2022, representing 43% of total Q1 activity. In terms of transaction size, small tier EMS providers accounted for 71% of the Q1 2022 transaction volume with five acquisitions. Mid tier providers accounted for two acquisitions, representing approximately 29% of total activity.
Despite ongoing global challenges of inflation, security and supply chain shortages, deal activity in the EMS sector remains robust and relatively consistent in terms of transaction volumes from the last 12 months. PE investments into EMS continue as there remains both a healthy appetite and sufficient liquidity for large take privates, platform investments as well as add-ons. Positive tailwinds, including but not limited to increased global security and defense spending, the growing electrification of vehicles and the Internet of Things (IoT) revolution, continue to bolster the industry via the increasing demand for electronics content. We expect that these trends and others will continue to drive EMS transaction activity through consolidations and vertical / horizontal convergences in 2022