Despite macroeconomic uncertainty and pockets of softness, the industrial market’s strong fundamentals remain intact. Due to several long-term tailwinds, high-quality industrials businesses continue to drive growth and capture strategic buyer and investor attention. 

Below, our senior professionals share the trends generating industrials M&A activity and recent Harris Williams engagements that illustrate the opportunity. 

Homefield Advantage

With the settling of global supply chain disruptions, companies are now looking to optimize their manufacturing footprints, lower costs, and guarantee safe and on-time delivery of goods. As a result, substantial onshoring and nearshoring initiatives are creating a wide range of investment opportunities.  

Industrial and commercial construction, for instance, is poised for a boost with companies building, expanding, and refurbishing more manufacturing facilities in or near the U.S. This will cause greater demand for building materials as well as various engineered equipment, products, and components that are necessary for the operation of these facilities. 

In addition, as more onshore and nearshore commercial factories are built, more labor will be required to run them. In turn, residential and light-commercial construction will be needed to support housing, office space, retail locations, and related infrastructure such as roads, bridges, and public transit. These onshoring demand shocks will also eventually lead to steady maintenance, repair, and operations opportunities throughout this expanded building products landscape. 

Within chemicals and specialty materials, sourcing issues disproportionally impacted the segment due to the worldwide complexity of input supply chains. Companies in the sector increased safety stocks, causing an unusually protracted period of destocking. These factors have led to a heightened focus on supply chain diversity, onshoring and nearshoring of supply, and rightsized inventory, all of which support greater industry stability and investor demand in the short and medium term. 

Macro Trends, Broad Appeal

The industrials market is also benefiting from many other macro themes that will drive further growth. For example, electrification, investments in outdated infrastructure, and a greater emphasis on environmental factors and workplace safety are all sparking investment appeal across industrial products, services, and technologies.   

Given labor market conditions, industrial players are increasingly tackling these opportunities with innovative solutions and technology. Significant growth potential exists in areas like the semiconductor value chain, data centers, automation, and data tools for manufacturing.  

At the same time, the packaging sector offers broad investor interest due to its end-market diversity, ubiquitous applications, and nondiscretionary demand. Packaging remains a critical differentiator that integrates brand awareness, technology, product security, automation, and efficiency, and leading packaging companies continue to innovate while striking a balance between performance, functionality, and sustainable practices. 

A Landscape of Potential 

Several trends are generating growth opportunities throughout industrials, including manufacturing onshoring and nearshoring, infrastructure aging, a heightened focus on operating efficiency, a need for sustainable solutions, and increasing technology adoption. 

“Private equity groups, strategic buyers, and infrastructure funds looking to put capital to work in the industrial sector will continue to have multiple options to explore,” says Tim Webb, a managing director in our Industrials Group. “We’re excited to see how worldwide dynamics will create long-term value-creation potential for our clients across building products; engineered equipment, products, and components; chemicals and specialty materials; industrial technology; and packaging.” 

To further discuss industrials M&A, please contact our senior professionals.