Insight

Industrial manufacturing deals lost steam in Q2

Despite weak Q2 results and macro concerns, 68% of IM executives believe that IM M&A activity will increase in the next 12 months.

Donald L. Zambarano

Donald L. Zambarano

Partner, Deal Advisory, KPMG US

+1 212 954 2049

Total numbers of IM deals fell from 2,599 to 1,767 in Q2, a drop of 32 percent from the first quarter. Year on year, the drop of 26.4 percent was scarcely better. Enthusiasm was dampened more or less equally for domestic, inbound, and outbound deals, all three of which fell by roughly a third.

IM executives surveyed also worry that COVID, increased concern about the balance sheet and, to a lesser extent, market uncertainty (including macroeconomics, geopolitics, and tax changes) may reduce deal activity. Fewer IM executives see inflation as destructive to their business than do executives in other industries, but more IM executives say their business has been negatively affected by the Russia-Ukraine war.

Although many remain cautiously optimistic, KPMG Senior Economist Tim Mahedy sees cause for concern. He says between high inflation, sharp interest rate hikes intended to curb that inflation, and global economic uncertainties stemming from the Russia-Ukraine war, the outlook is not very bright for most industrial manufacturing sectors, with one exception: defense.

U.S. IM activity by sector

Within your industry, how strong is the appetite for M&A in Q2'22 as compared to 2021?


*Source: KPMG M&A Market Survey

Contributing authors

Donald L. Zambarano

Donald L. Zambarano

Partner, Deal Advisory, KPMG US

+1 212 954 2049
Jim Adams

Jim Adams

National Aerospace and Defense Industry Leader, KPMG US

+1 310-766-3601
Scott Heery

Scott Heery

Partner, Advisory, Financial Due Diligence, KPMG US

+1 267-256-1911
Scott Heery

Scott Heery

Partner, Advisory, Financial Due Diligence, KPMG US

+1 267-256-1911
Bala Lakshman

Bala Lakshman

Managing Director, Strategy, KPMG US

+1 214-840-4005
Serena Crivellaro

Serena Crivellaro

Managing Director, Strategy, KPMG US

+1 212-954-7468