M&A growth fueled by new tech acquisitions

A recent report is showing that a spike in M&A activity is being attributed to a race to acquire technology.

The Automotive Aftermarket Investment Report – an annual offering from the Automotive Aftermarket Suppliers Association and Jefferies LLC – showed that changing personal mobility, autonomous driving, vehicle and driver connectivity and an increase in vehicle electrification is driving OEMs, tier 1 suppliers, non-automotive technology companies, private equity firms and select aftermarket players to place bets on a number of auto-tech companies in 2017.

More than 100 M&A aftermarket transactions have been posted in six of the last seven years with more than 160 taking place in North American and Europe last year alone.

“The industry remains attractive to both strategic and financial buyers due to favourable industry tailwinds which include growing and aging car parc, increasing vehicle utilization and miles driven, and low fuel prices (although gas prices are now on the rise),” the AASA said in a news release. “Complementing these are a healthy U.S. economy, rising disposable income and inexpensive debt.”

About 83 percent of transactions involved a strategic buyer in 2017, which is in line with the last five years’ average. Of that 83 percent, about 40 percent of the acquirers were private equity-backed. Of deals completed in 2017, 37 had disclosed prices – 19 of which had total transaction value exceeding $250 million.