Number of Industry 4.0 deals in DACH region jumps to above 600

The number of Industry 4.0 deals in the DACH region – Germany, Austria and Switzerland – has boomed last year to over 600, up from 513 in the year previous. “A mere buzzword a few years ago, Industry 4.0 has become today’s reality and is one of the hottest M&A sectors,” said Peter Baumgartner, an advisor at Hampleton Partners.

Industry 4.0 has become an integral part of business for manufacturing and technology players. Companies such as Bosch, Festo, PTC and Siemens are leveraging the benefits of Industry 4.0 to bolster the efficiency and effectiveness of their operations. M&A strategies are playing a crucial role in the development of Industry 4.0 offerings, allowing industry leaders to acquire key technologies to stay ahead of the competition or even reposition themselves in the market, while enabling innovative emerging players to leverage additional funding or strategic partnerships with global industry leaders.

According to data compiled by Hampleton Partners, a mergers & acquisitions and corporate finance advisory firm, heightened interest in Industry 4.0 technologies has lifted deal activity to a record high. “Data management capabilities remain at the core of the smart factory evolution: connectivity, transmission, smoothing, processing, evaluation and storage of data,” explained Baumgartner.

Artificial intelligence (AI) and machine learning (ML) has been identified as a major driver of deal activity. With AI, industry players can optimise the use of connected systems (sensorics, IoT, etc.) and pursue breakthrough innovation, while machine learning allows for large quantities of data to be used in making predictions and optimising manufacturing processes. Baumgartner: “Capabilities such as pattern recognition and learning from experience will become integral parts of the smart factory.”

Among the largest deals of 2018 in the Industry 4.0 space were ENGIE’s acquisition of German building automation specialist OTTO Luft- und Klimatechnik (a provider of products in ventilation and air conditioning, cooling technology and building automation), the minority control acquired by private equity firm EMH Partners in Brainlab (a software-based medical technology provider), and Bosch’s purchase of German electro motors manufacturer EM-motive.

Meanwhile, several start-ups and scale-ups received growth funding. Scailyte, a Swiss software developer, received €2.4 million in seed funding from a group of investors in December; WayRay, a Swiss developer of complex augmented reality hardware, received $80 million in a Series C funding round led by Porsche in September; GreenPocket, a German smart metering provider, received €3.1 million in a growth funding round led by DEW21; and Graphcore, an artificial intelligence chipmaker, received $200 million in a Series D round led by Robert Bosch Venture Capital.

“Technologies such as artificial intelligence, robotics, medical technology, cleantech and smart building technologies are key drivers of M&A. Companies in the region are transforming their businesses by buying, funding or partnering with experts in these fields to ensure they are well-positioned for the Fourth Industrial Revolution – Industry 4.0.”

Related: Global merger & acquisition deal value spikes to $3.4 trillion.