PwC estimates that 2021 will see 174 supplier M&A deals by year-end, up from 101 last year and 159 in pre-pandemic 2019. In its new analysis of global supplier activity, PwC found that 30 percent of this year’s deals are going to private equity firms, rather than to fellow auto parts companies.
Also playing a larger role in industry M&A activity today: SPACs, or special-purpose acquisition companies. SPACs are investment vehicles that allow an entity that has no specific business, but has access to the stock market, to acquire a company and instantly make it a publicly traded business with an influx of new capital.
PwC found that 70 percent of this year’s 10 largest completed deals and 10 largest pending deals involve a SPAC.
The financial firm estimates there are 600 more SPACs in the market today that could make similar plays. They are not all focused on automotive, Ostermann pointed out. “But if only 10 percent of them are, that’s potentially another 60 large deals waiting to happen.”
Half of the megadeals in the industry have been for companies in the fields of battery-related technologies, sensors and software, according to PwC. And that new interest is pushing business valuations higher, Ostermann said.
“Last year during COVID, we were seeing valuations decline. But it’s clear that we’ve reached the bottom and now valuations are starting to come back up,” he said. “Automotive acquisitions are going to be more expensive going forward. So buying now would be better than buying a year from now.”
But the crisis isn’t over yet, Ostermann warns.
