You want to sell your metal business? Then it is good to know what the acquisition market in the field of metal companies looks like. The metal industry has many smaller businesses and there seems to be overcapacity, which could lead to more business acquisitions.
The 2016 peak has not been matched, but the trend of consolidations in the metals industry is on the rise again. According to ING, there are more new businesses in the metals sector, and fewer closings, which of course indicates a growing market.
There are many ways to value a business. A common method of expressing the value of a business is "a factor x gross annual profit." This factor is also called multiple and another designation for gross annual profit is EBITDA (Earnings Before Interest Taxes Depreciation and Amortization).
For the industrial & manufacturing sector - which includes metal companies - an indicative EBITDA multiple range of 4.6 to 5.5 is currently used, according to the Brookz Takeover Barometer. The average EBITDA multiple across all SME sectors is 4.90.
The valuation of a business is often the starting point for negotiations between buyer and seller. The outcome of these negotiations is the final sales price. So valuation and price are two different quantities. Besides valuation, the price is also determined by possible scarcity in the market, bargaining power of the parties, the strategic value of the business for the buyer and possible synergy effects for the buyer (cost savings, purchasing advantages).
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Want to buy a business or sell a business in the Industry & Manufacturing sector? With this Brookz Sector Monitor, we want to present buyers and sellers with facts, figures and an outlook that provide insight into the number of transactions, the value development of businesses and the latest trends and developments in the Industry & Manufacturing sector. Because in any buying or selling process, thorough preparation gives peace of mind, overview and structure.
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Despite growth in the sector, there is also cause for concern. The pool of available skilled workers is rapidly drying up. Many sectors within the metal sector do not expect to be able to fill all outstanding vacancies in the coming years. In addition, it is time to invest in robotization, which Rabobank also believes will receive more attention.
In figures, the number of metal companies in 2024 looked as follows(CBS):
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A number of trends and developments will inevitably cause changes in the coming years, but also offer metal companies many growth and acquisition opportunities:
Internet of Things is also an irreversible trend in the metal industry. Both production machines and products are increasingly connected. The industry uses IoT primarily to increase the efficiency of processes. But it is also a means to develop distinctive services and new business models. To keep up with developments, the metal chain must invest in software and automation in the coming years; the prerequisites for further chain integration and successful data sharing.
The transition to new production processes in the main markets for the metal industry (construction and mechanical engineering) also require innovation from producers in the metal industry. To achieve this, producers of metal products must work closely with the customer and other chain partners. As a result, products will be adapted faster and better to the demand for increasingly customized and small batches.
Buyers of metal companies expect manufacturers to constantly innovate. The demand for new products will continue. This means that businesses in the industry must pay constant attention to innovation. Part of this is that metal companies will have to differentiate themselves in process, manufacturing or component technology, because competing on price is not a sustainable business model in the long run.
Competitive pressures have increased, in part due to the quality drive of many foreign manufacturers, who in many cases offer similar products at lower costs. In recent years, many businesses have invested in production process automation, with the goal of further optimizing production and supply processes. This leads to increases in labor productivity, shorter lead times and changeover times, and reduced failure costs.
According to Rabobank, there are opportunities for the metal industry, in the area of sustainability. Strict sustainability requirements are coming from the government, making circular business processes not only interesting, but also necessary.
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