Insight

After a five-quarter streak, IM deal making is slowing

Inflation, supply-chain issues, and the impact of the Russia-Ukraine war are raising uncertainty in Industrial manufacturing M&A.

Donald L. Zambarano

Donald L. Zambarano

Partner, Deal Advisory, KPMG US

+1 212 954 2049

Todd Dubner

Todd Dubner

Principal, Strategy, KPMG US

+1 212-954-7359

In Q1’22 the deal-making streak in industrial manufacturing (IM) lost momentum. Deal volume fell 35 percent to its lowest level since Q3’20, mainly due to a drop in outbound and aerospace & defense deals.

IM Deal Volume and Deal Value


*Includes SPAC deals (US$2.7 bn SPAC value and 4 SPAC volume for Q1’22)

IM Deal Volume by Sub sectors and Total Deal Value 


Key trends in IM M&A in Q1’22 include:

  • The biggest drops in deal volume were in private equity and SPAC deals, which dropped by 51 percent and 43 percent, respectively, from Q4’21.
  • There were only 518 deals involving diversified industrial companies, their lowest level since Q3’20.
  • Deals by strategic buyers in automotive bucked the trend, rising by 54 percent.
  • The value of inbound deals for IM fell sharply, from $43 billion in Q4’21 to $13 billion in Q1’22 and the value of outbound deals fell 16 percent.

Looking ahead, IM businesses are likely to feel direct and indirect impacts of Russia’s invasion of Ukraine. Russia and Ukraine are critical suppliers of palladium and neon gas, which are used to produce catalytic converters and semiconductor chips. The supply of titanium, which is widely used in airframes and jet engines is also disrupted. We would expect these new disruptions to encourage near-shoring and some vertical-integration deals to ensure access to critical material and parts. The commercial aviation sector will remain under strain due to rising fuel costs, the closure of Russian air space and large numbers of flight cancelations. Higher defense spending could help offset some of these headwinds in A&D.

Our Q1’22 report on IM unpacks these trends and includes ‘deep dives’ on two topics:

A stalled boom
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Contributing authors 

Donald L. Zambarano

Donald L. Zambarano

Partner, Deal Advisory, KPMG US

+1 212 954 2049
Todd Dubner

Todd Dubner

Principal, Strategy, KPMG US

+1 212-954-7359
Marc Craig

Marc Craig

Director, Advisory, KPMG US

+1 312-665-3203
Z. Maria Wang

Z. Maria Wang

Director Advisory, Strategy - COE, KPMG US

+1 617-988-1000
Sudipto Banerjee

Sudipto Banerjee

Principal, Pricing & Commercial Excellence Leader, KPMG US

+1-404-907-6173
Jim Adams

Jim Adams

National Aerospace and Defense Industry Leader, KPMG US

+1 310-766-3601