SAZUN BLOG
März 8, 2021

Industry Insight Flow Control

“Welcome to our latest Flow Control Industry Insight, giving you a glimpse on market sizes, trends, M&A transactions as well as industry valuations.
Despite the significant impact of the pandemic on the oil & gas industry, we can observe interesting market conditions with recovering global demand, technological innovations and a fragmented market, creating attractive M&A opportunities. Especially the valves and the pumps market show active consolidation by major market players, combined with relatively high multiples.”

Emanuel Müller
Managing Partner

Market Insights
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Global Market

Flow Control Market
by product in %

 

Forecast
global in USD B

 

Industrial Hoses Market
global in USD B

  • The flow control market, which comprises pumps, valves, compressors and seals & gaskets is expected to grow 5.2% p.a until 2025. Expecting a significant recovery after the negative impact of the Covid-19 pandemic on the oil & gas industry, resulting from almost bursting storages and tumbling prices
  • The related industrial hoses market is expected to grow 6.5% p.a., joining the rally and driven by increasing demand for robust hoses for critical applications, the growing infrastructure-sector and the recovering automotive sector

 

Sources: OEDC Interim Report (2020), Markets and Markets (2020), Mordor Intelligence (2020), Global Market Insights (2019),
Grand View Research (2020), World Bank (2018);

Market Details &  Segments 

 

Industrial Valves
by application in %

 

The Covid-19 Impact
in USD B

 

  • Industrial valves, like the flow control industry in total, suffered from the reduced demand in the oil and gas sector. Still being the biggest customer branch, other industries grew importance during the pandemic, like pharmaceuticals and the energy sector
    changing business focus towards the outdoor industry.

    • However, analysts expect the overall market to start a rally, approaching year-end 2021. Provided that the post-pandemic market will not be thwarted by an economic crises, a growth of 6-7% p.a. can be expected

Sources: Markets and Markets (2020), Mordor Intelligence (2020), Global Market Insights (2020), Allied Market Research (2019);

 

Flow Control Trends

  • A short to mid-term trend of the pandemic will be a significant increase in the demand within the pharmaceutical chemical industry. Industrial valves are key in the manufacturing of different types of medical devices and some players like Emerson, whose valves amongst others manage pressure relief keeping equipment and materials clean and support blood analyzers, have seized this market opportunity
  • Additionally, manufacturers are increasingly investing in research and development (R&D) in the pharma field with a great focus on automatic components (such as solenoid valves)

  • Centrifugal industrial pumps dominated the market and accounted for a 58% share of the global revenue in 2020
  • Product demand is expected to remain strong given the shift in consumer preference towards the replacement of the entire pump rather than individual parts, owing to a lack of skilled maintenance personnel

  • One of the key drivers behind the compressor market is a growing gas pipeline network, led by a surge in natural gas demand
  • Europe has been striving to find alternative and cleaner energy sources, which has led to a steep decline in coal consumption across the region. In turn, Europe’s dependence on gas for power as a substitute of coal has created a huge opportunity for the compressor market

  • Demand for products in fluid transfer applications in semi-conductor manufacturing is expected to post strong growth and as such, key players are developing advanced engineered sealing solutions, designed and implemented for use in harsh operating conditions (i.e., corrosive chemicals and/or extreme temperatures)
  • Industry participants are adapting their approach by offering added-value (post-sales) services, such as field support and assistance, coupled with competitive pricing strategies

Sources: Markets and Markets (2020), Meticulous Research (2020), Global Market Insights (2020);

M&A Insights Flow Control
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Valuation Trends and Developments

 

Relative European M&A activity
by product in %

EV/EBITDA NTM (NTM)

  • Especially the pumps and valves segment show M&A attractiveness given their high degree of fragmentation, while the seals & gaskets market is already largely consolidated
  • Peer group EV/EBITDA (NTM) multiples have increased significantly up to 14x EBITDA
  • Main M&A considerations continue to be geographic diversification, new product developments (e.g. smart devices, automation, etc.) and supply chain reassessment due to trade tariffs

Sources: Sazun Research Flow Control, MergerMarket

Key Performance Indicators – Stock Listed Peers

Source: Infront Analytics – Sazun Global Flow Control Peer Group

Selected Deals (LTM)

Want to know more?
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If you would like to learn more about the valuations and deals of your industry, the transaction mentioned above, or generally our way of working, we would certainly be happy to demonstrate our m&a PLUS® principle in a confidential meeting. Of course, we also offer detailed overviews of the vending machines business, bakeries, and travel platforms, where we have strong credentials.
Just get in touch and we will share our experience on how to grow businesses with long-lasting partnerships.

With passion for M&A,
Your SAZUN Team