Harris Williams Industrial Technology Introduction

Harris Williams (“HW”)

  • 25+ years and more than 1,000 closed transactions
  • 350+ professionals across eight office globally
  • 170+ closed transactions in the last 24 months
  • 10 industry groups

Focused Advisory Services

  • Mergers and acquisitions (M&A)
  • Capital raises
  • Corporate divestitures
  • Industry insights and knowledge
  • Valuation
  • Strategy and negotiation

Consistent Recognition for Quality

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Harris Williams Efforts in Industrial Technology

  • Dedicated sector coverage as part of Harris Williams’ broader Industrials practice
  • Global team of senior professionals in Richmond and Frankfurt
  • Focus on high technology / engineering content that provides mission critical value relative to broader systems
  • Extensive execution experience and proven ability to understand complex technology-oriented companies

Industrial Technology Focus Sectors

  • Automation
  • Test & Measurement 
  • Communication & Connectivity
  • Engineered Components

Harris Williams Current Market Observations and Insights

Current Market Observations

Economic Outlook

  • Volatility in the public markets will likely remain as investors, businesses and policymakers evaluate rapidly evolving trends in the wake of COVID-19.
  • Economists and industry analysts expect improvement in the back half of 2020 as economies begin to reopen, while uncertainty remains around the shape and magnitude of the recovery amidst a resurgence of COVID-19 infections.

Buyer Sentiment

  • Private equity firms and strategic acquirers have been focused on meeting near-term operational needs and assessing the medium- to long-term impact of COVID-19.
  • Despite economic uncertainty, the desire to invest remains–financial sponsors have record levels of capital to deploy, and many are communicating that they are “open for business” while acknowledging high-quality deal flow will be limited.
  • As capital markets stabilize, companies with strong liquidity positions will be well positioned to pursue acquisitions of complementary and adjacent technologies that accelerate growth.

Debt Markets

  • Debt markets have shifted to a risk-off mentality, with lenders prioritizing incumbent credits and relationships, greater receptivity for smaller deals (e.g., add-ons), and increased pricing across the board.
  • Concerns over liquidity and funding availability for companies contribute to ongoing uncertainty regarding the duration of the effects of COVID-19 on the debt markets.

M&A Valuations

  • COVID-19 has delayed exit timing for many companies, but select deals are still closing successfully. Although a number of transactions remain on hold, an increasing number are preparing for market and carefully weighing timing.
  • Although the valuation landscape has yet to fully settle since the start of COVID-19, high-quality companies remain attractive and will continue to command a premium given their ability to weather, and/or benefit from, a post-pandemic economy.

Deep Sector Expertise and Execution Excellence

  • Harris Williams has a proven ability to understand complex technology-oriented  companies and position the nuances to deliver benchmark valuations.
  • Extensive experience and valuable insights from our dedicated global team provide real-time market insights from hundreds of touch points across the world and the firm.
  • Our professionals have a unique understanding of how to navigate and execute successfully amidst an unprecedented market environment.

Latest Harris Williams Market Insights

For access to Harris Williams’ latest insights and perspectives, email us at insights@harriswilliams.com
or visit www.harriswilliams.com/news-insights.

Industrial Technology Content and Resources

  • Smart City Opportunities
  • Market and Sector Observations
  • Industrial Technology Update
  • Industrial Software Update
  • Industry Conferences
  • Industrial Sensor Platforms

Smart City & Mobility Tech Market at a Glance

Serving the Entire Smart City and Mobility Tech Market Across Harris Williams’ Global Footprint

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Sources: McKinsey, Roland Berger, EY, Technavio, HW Intelligence

Long-Term Smart City & Mobility Tech Market Drivers

Intelligent Transportation Systems (ITS)

  • Increased investment in intelligent, adaptive ITS solutions over traditional infrastructure expansion reduces congestion, real economic costs and environmental impacts.
  • Continued support for “greener” and pedestrian-friendly solutions drives innovation across public and private modes of transportation.
  • Proliferation of autonomous/connected vehicle technologies requires more robust sensor content, communication infrastructure and data analytics capabilities.

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Building Automation

  • Accelerated adoption of building information modeling (BIM), life safety solutions and communication technologies facilitates the design and operation of more efficient, secure and connected buildings.
  • Remote monitoring and automation of environmental conditions and utility usage reduces occupancy costs and increases energy efficiency.
  • Machine intelligence and biometric technologies provide actionable insights amidst massive and growing volumes of data.

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Smart Infrastructure

  • Real-time data analysis, sensors and communication technologies help address increased demand for safety and environmental monitoring.
  • Long-term demand for efficient, sustainable and reliable critical infrastructure/public services across waste, water and power drives continued innovation.
  • Rollout of 5G coverage and small-cell networks deliver necessary connectivity for vehicle-to-infrastructure (V2I) and pedestrian applications across public spaces.

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Mobility Information and Control

  • Rapid growth in e-commerce and subsequent shipping and freight volumes require comprehensive asset tracking capabilities to optimize supply chains and limit risk of theft, damage or loss of product.
  • Mass adoption of video telematics across public and private fleets help reduce operational and maintenance costs and increase driver safety.
  • Increased utilization of sensors and centralized software platforms delivers real-time tracking, monitoring and life-cycle management of industrial equipment and processes.

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Increased adoption of smart city technology presents a $2.5 Trillion market opportunity by 20252

1. Traffic management includes display boards, sensors and cameras. ITS includes advanced traffic management systems, advanced traveler information systems, ITS-enabled transportation pricing systems
2. PwC and “Smart Cities Market Analysis & Segment Forecasts to 2025,” Grand View Research (2018)
Sources: McKinsey, Roland Berger, DuckerFrontier, Markets and Markets, Grand View Research, HW Intelligence

Potential Impact of COVID-19 on Smart City & Mobility Tech Subsector

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Source: HW Intelligence

Subsector Deep Dive: Intelligent Transportation Systems (ITS)

Intelligent Traffic Management

  • (Arterial) Traffic Management Systems
  • Traffic Data Services
  • Transportation Planning & Optimization Software
  • Vehicle & Bicycle Detection

Public Transportation

  • Automated Vehicle Identification
  • Public Transit & Passenger Tracking
  • Tolling Hardware & Systems
  • Fare Collection

Smart Parking

  • Parking Guidance Systems
  • Payment Solutions
  • Enforcement Guidance
  • Data Collection Software
  • Access Control

Connected Vehicles

  • Roadside & Onboard Units
  • Small-Cell & Backhaul Technologies
  • Collision Avoidance Sensors
  • V2X Hardware & Software
  • Connected Intersections (Controllers)

Emerging Trends Across the ITS landscape

Adaptive Traffic Signal Control

Optimizes arterial traffic signal infrastructure in real time through demand-based adaptive signal control

Contactless/Open Payments

Increases the efficiency, safety and hygiene of public transit operations

Parking Enforcement Technologies

Compliance and violation monitoring solutions increase revenue and ensure adequate parking availability

V2X Infrastructure

Increased demand for V2X systems and sensors to ensure success of autonomous mobility

Advanced Detection & Sensors

Innovative and integrated technologies critical for overall safety and system effectiveness

Dynamic Pricing for Tolling

Designed to reduce congestion and boost revenue in high-traffic corridors

Touchless Parking

Touchless access control and payment systems enhance lot management efficiency

Communication Infrastructure

Small-cell technologies offer increased data capacity with lower latency

Real-Time Data Collection & Analysis

Provides ability to dynamically respond to traffic inefficiencies and emergencies

Flat-Rate Mobility Subscriptions

Provides customers access to various mobility services via a single platform at a fixed price

Smart Mobile, Data & Payment Apps

Seamlessly improve efficiency in finding, reserving and paying for parking

Cybersecurity & Data Privacy

Software solutions to protect against cyberattacks on vehicles and critical infrastructure

Sources: Markets and Markets, HERE Mobility, McKinsey, HW Intelligence

Increasing M&A Momentum Across the Smart Mobility and ITS Subsector

Select Notable Intelligent Transportation Systems M&A Activity

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Note: Logos are representative of M&A participants and not comprehensive
Sources: Pitchbook, Mergermarket, S&P Capital IQ

Intelligent Traffic Management Systems Landscape

To receive the latest Industrial Technology market maps, please contact Harris Williams at HWIndustrialTechTeam@harriswilliams.com

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Note: Grey box denotes subsidiary asset of corporate parent or private equity group
Sources: Pitchbook, Mergermarket, S&P Capital IQ

Smart Parking Landscape

To receive the latest Industrial Technology market maps, please contact Harris Williams at HWIndustrialTechTeam@harriswilliams.com

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Note: Grey box denotes subsidiary asset of corporate parent or private equity group
Sources: Pitchbook, Mergermarket, S&P Capital IQ

Public Transportation Management Landscape

To receive the latest Industrial Technology market maps, please contact Harris Williams at HWIndustrialTechTeam@harriswilliams.com

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Note: Grey box denotes subsidiary asset of corporate parent or private equity group
Sources: Pitchbook, Mergermarket, S&P Capital IQ

Intelligent Transportation Systems Public Market Observations

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3. As of July 20, 2020
Source: S&P Capital IQ

Intelligent Transportation Systems Market Valuations4

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NA: Not Available, NM: Not Meaningful
4. As of July 20, 2020
Source: CapitalIQ

Select HW Intelligent Transportation Systems Case Studies

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Description

  • Leading provider of intelligent traffic solutions to state and local governments across the U.S. and select countries around the world.
  • Offers a fully integrated, innovative suite of software, internet of things (IoT) and hardware solutions providing customers with enhanced mobility and improved safety.

Key Investment Thesis

  • Ability to leverage Trafficware’s intelligent, data-rich intersection-management technology to support next‐generation ITS solutions and diversify Cubic’s revenue stream.
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Description

  • Leading provider of end-to-end, cloud-based parking management solutions for off- and on-street parking
  • Offers a SaaS platform for parking management, enforcement, Parking Access and Revenue Control Systems (PARCS), payment processing, vehicle counting and event management, complemented by a suite of revenue-control hardware solutions.

Key Investment Thesis

  • Highly entrenched customer base consisting of municipalities, universities, hospitals and transit systems, providing long-term organic growth opportunities.
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Description

  • Leading traffic safety platform serving large, global base of customers across 90 countries with 20 manufacturing facilities and sales offices on five continents.
  • Strong market position across an array of intelligent traffic components, including conflict-monitoring devices, inductive loop detectors and pavement-marking applications.

Key Investment Thesis

  • Diverse base of long-term customer relationships with stable recurring demand and highly customized products, offering attractive financial profile and compelling M&A platform.

Investment banking services are provided by Harris Williams LLC (“Harris Williams”). Harris Williams is a registered broker-dealer and member of FINRA and SIPC. Harris Williams & Co. Ltd is a private limited company incorporated under English law with its registered office at 8thFloor, 20 Farringdon Street, London EC4A 4AB, UK, registered with the Registrar of Companies for England and Wales (registration number 07078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. Corporate Finance Advisors GmbH is registered in the commercial register of the local court of Frankfurt am Main, Germany, under HRB 107540. The registered address is BockenheimerLandstrasse33-35, 60325 Frankfurt am Main, Germany (email address: hwgermany@harriswilliams.com). Geschäftsführer/Directors: Jeffery H. Perkins, Paul Poggi. (VAT No. DE321666994). Harris Williams is a trade name under which Harris Williams LLC, Harris Williams & Co. Ltd and Harris Williams & Co. Corporate Finance Advisors GmbH conduct business.

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