„Lots of M&A activity despite difficult market conditions outline the importance of niche players and innovative trends in the flow control industry„
Emanuel Müller
Managing Partner
Market Insights
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Global Market
Flow Control Market
by product in EUR b 2021-2026
- The market for flow control is expected to grow at a +4,3% CAGR between 2021 and 2026
- The individual segments are to develop relatively stable with Pumps experiencing the fastest growth amongst the segment
- The growth is primarily to be expected due to the current well-being of oil and gas industry (despite the current macroeconomic situation)
- Additionally, the market for pumps is to benefit from a higher emphasis on renewable power generation augmenting their demandWe conclude the growth outlook to be positive, given that the past years were challenging for the industry considering US tariffs on raw material (aluminum & steel) imports
- We conclude the growth outlook to be positive, given that the past years were challenging for the industry considering US tariffs on raw material (aluminum & steel) imports
- Due to the macroeconomic factors Europe will likely depend on LNG in the next few years, which comes at a steep price. European imports of LNG rose by more than 50 percent compared with the period a year earlier in the first five months of 2022. Likewise, countries like Germany have no LNG receiving terminals yet, which might lead to an additional European economic downfall in case Russia cuts off the fuel
Sources: Markets and Markets (2022), Global Market Insights (2022), Grand View Research (2022)
Related Market Details
Industrial Hoses
Europe and Rest of World by application in EUR b 2021-2026
- The market for industrial hoses is closely related to the flow control industry because of its many intertwined application and sector touch points
- On a global scale we estimate a CAGR of +9.9% in the market for industrial hoses – primarily reasoned through developments in global infrastructure focused on hydrogen and LNG
- The market in Europe displays a slower CAGR of +5.6%, resulting in a total increase of +31.3% by 2026
- In Europe we assess the key drivers as well in infrastructural developments, but also in the modernization of agricultural processes
Sources: Technavio (2021), KTVN (2021), Businesswire (2021), Data Bridge Market Research (2021)
Latest Trends Flow Control
Covid-19’s macroeconomic impact on the flow control industry was broadly facetted. During the first shocks of the pandemic, the market dropped and suffered due to enormous demand and price decreases. However, through the parallelly induced shortages in supply and recovery of the industry, demand was ignited again and prices for raw materials went through the roof.
Environmental sustainability and circular economy play a paramount role in the market. Companies not only have to evaluate suppliers on their ESG governance when purchasing, but also the impact of the acquired products for their own manufacturing processes.
Automation and Internet of Things disruption have awakened customer demand for connected hardware solutions with software controls, enabling new digital value streams, such as maintenance-as-a-service, predictive maintenance, remote support and data-driven product development.
The immense opportunities brought by the innovations in Automation and the Internet of Things allow Flow Control players to broaden their M&A perspectives. Whilst in the past transactions were mostly focused on industry consolidation, we witness a trend towards M&A mandates to fill gaps in technology and capabilities.
Sources: McKinsey (2019;2021), Pumps & Systems (2020)
Valuation Trends and Developments
EV/EBITDA (Next 12 Months)
- Peer group EV/SALES (NTM) and EV/EBITDA (NTM) multiples have increased significantly up to a median valuation of 2.5x and 12.5x respectively – However, most recent expectations show a down-ward trend with a slight recovery towards Q2 2022
- Main factors impacting the market include the tense macroeconomic situation, price increases and the fear that manufacturers won’t be able to transfer the prices to the customer – Corporates able to maintain their margins are certainly on the winning side here, which might lead to further consolidation within the market
Source: Sazun Equity Research, Flow Control Peer (2022)
Key Performance Indicators
Source: Sazun Equity Research, Flow Control Peer (2022)
Selected Peer Group
Source: Sazun Equity Research, Flow Control Peer (2022)
Selected Deals
Sources: Mergermarket, Sazun Equity Research
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. 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
