September 11, 2019

Industry Insight Flow Control – Industrial valves are to become the biggest segment

„Welcome to our flow control industry insight. You can read about market sizes, trends, M&A transactions as well as industry valuations.
Industrial valves are to become the biggest segment within flow control by 2024 and catching opportunities arise due to expanding natural gas infrastructure. Geographic diversification, new product developments and supply chain reassessment drive M&A considerations

Market Update


Global Market


– The flow control market, which comprises pumps, valves, compressors and seals & gaskets is expected to grow 4.4% p.a. While pumps have the biggest market share, valves are expected to grow the fastest with 5.4% p.a. and are expected to overtake pumps by 2024.
– The related industrial hoses market is expected to grow 5.8% p.a., driven by increasing demand for robust hoses for critical applications, the growing infrastructure-sector and the automotive sector.

Market Details & Segments


– Within the fast-growing valves market, oil & gas continues to represent the biggest segment, followed by energy production.
– For seals & gaskets, OEM clients expect significant recurring revenues, driven by replacement of components due to degradation and wear from fluid system temperatures, pressure and acidic material flows.
– For valves and centrifugal compressors, the growing natural gas infrastructure represents a driving factor. The focus market is China, which is committed to strengthening its natural gas pipeline network – a key application for centrifugal compressors.

Industry Trends


– Demand for valves is increasing due to the benefits they offer in terms of pressure or temperature control throughout upstream, midstream and downstream activities in the oil & gas industry. High growth in the pipelines sector along with the developments in renewable energy projects are driving demand.
– Top trends within the valve market include the integration of valves with plant asset management systems, advances in control valve technologies and the growing use of remote control operations and solutions

– The pumps market is growing at 2.4% p.a. driven by increasing demand from the building & construction and oil & gas industries in emerging regions with rapid industrialization such as Asia Pacific and Latin America.
– Furthermore, the cost of production reaches over 40% in energy-intensive industries including oil & gas, food and beverage as well as power. Such rising consumption by these end-user industries has urged the adoption of energy-efficient equipment.

Power Generation
-Power generation, oil & gas, and the industrial sector are the biggest application industries of compressors. Natural gas is increasingly replacing oil and coal as a source of energy for power generation.
– Technological advancements are making compressors more energy efficient and environmentally friendly. This trend is expected to replace a high number of existing conventional compressor units, which in turn, is expected to increase the demand for compressors.

– Increasing application of “form in place” (FIP) foam gaskets in the growing automotive industry is expected to be one of the primary factors driving overall demand.
– Volatility in crude oil prices is expected to impart a degree of uncertainty in the price of raw materials, which is anticipated to negatively impact the market growth.

M&A Insights Flow Control


Valuation Trends and Developments


– Especially the pumps and valves segment show M&A attractiveness given their high degree of fragmentation, while the industrial hoses and the seals & gaskets markets are already largely consolidated.
– Peer group EV/EBITDA (NTM) multiples stay within a stable range of 9 to 11 x EBITDA.
– The main factors impacting M&A activity include geographic diversification, new product developments (e.g. smart devices, industry 4.0), and supply chain reassessment due to trade tariffs.

Key Performance Indicators

Selected Latest Transactions


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With passion for M&A,
Your SAZUN Team