2017 was another record year for Mergers & Acquisitions in the Test & Measurement (T&M) sector, with deal volumes up by 11%. The sector has seen strong interest from both trade investors and private equity, with heady valuations reflecting the robust potential of T&M technology and the unquenchable demand for TIC services.
The sector has seen double-digit growth in transaction volumes year-on-year since 2014, leading to 357 deals completing in 2017.
UK businesses featured in 23% of all transactions in 2017, confirming the country’s long-held position of strength in the global T&M market, but North America continues to dominate the landscape, with 148 transactions completed in the year.
Cross-border transactions have increased year-on-year, and now account for half of all deals, confirming the increasing global importance of the sector. For us here in the UK market, this figure increases substantially with 60% of all UK transactions involving an international party on the other side of the deal.
31 UK businesses were sold to overseas acquirers, while UK acquirers bought 19 overseas targets in 2017, underlining the sustained appetite to transact, in spite of Brexit negotiations and the economic and political uncertainties.
Sales of UK-based businesses to overseas acquirers include Environmental Scientific Group’s sale by 3i to Socotec France SA, and Exova Group plc’s sale to Element Materials Technology NV, for a consideration of £620m, implying an enterprise value of approximately 12.5x Exova’s adjusted EBITDA.
Further buys into the UK market included Hitachi’s £80m acquisition of the Industrial Analysis Business of Oxford Instruments plc, and Snap-On Inc’s $72m acquisition of torque tightening and measuring equipment business Norbar Torque Tools, representing an EBITDA multiple of 15x.
On the other side, examples of UK company buys in the international market included Spectris plc’s acquisition of Italian X-ray detector business PIXIRAD Imaging Counters and the £20m acquisition of US-based Omnicon Group Inc. Spirax-Sarco Engineering plc also made buys overseas, including German fluid process control business Gestra AG, and US-based Chromalox Inc.