Figure 1: Five Promising IIoT Segments
Based on recent analysis and deal activity, Harris Williams believes there are five industrial segments ripe for IIoT-related investment by private equity firms: Extraction & Heavy Industry, Transportation & Fleet, Manufacturing & Supply Chain, Sensors & Infrastructure, and Utilities & Smart Grid.
Onicon Case Study: Target Assessment and Platform Development
Principle One: Be Flexible on Size
Principle Two: Look for Strong Core Technology and Applications Expertise
Principle Three: Assess the Potential for Transformational Change, Knowing it Might Exceed Current Management’s Vision or Capability
Identifying other types of sensing technologies that could be applied to the company’s core applications
Modifying the company’s current sensor technologies to expand into new applications or new markets
Offering other technologies that are part of the larger system the core technology serves
Increasing content provided to the existing customer base and selling more through existing channels
However, he adds, those leaders may not be as well-suited to carry out an M&A strategy, or identify promising adjacencies for existing products. Thus, they could be retained in different roles, with a new layer built above them: a new CEO, executive team or corporate development function with the experience needed to take the company to the next level.
From $60 Million to $1.5 Billion: The Measurement Specialties Story
During a ten-year span, Measurement Specialties (MEAS), a sensor and sensor systems provider, acquired 17 smaller companies specializing in pressure, temperature, humidity, level inertia and other variables. It grew from $60 million in revenue in 2004 to approximately $540 million by 2014, transforming itself into a truly diversified, market-leading sensor platform.
That year, MEAS was itself acquired by TE Connectivity (TEL), an electronics components company. The $1.5 billion acquisition, at an EV/EBITDA multiple of approximately 22x, was one of the largest ever completed in the test and measurement equipment market, and remains a testament to the value creation potential of the buy and build strategy.