A programmatic M&A strategy could help European machinery companies to stay competitive and attract and retain skilled talent (programmatic M&A is when companies regularly and systematically pursue multiple small or medium-size acquisitions). M&A and divesture activity in the machinery sector recorded a sharp drop in the second half of 2020, but transactions rebounded within a year, with activity in 2021 and 2022 surpassing prepandemic levels. Senior partner Dorothee Herring and colleagues find that M&A activity in the machinery sector correlates with rising margin performance, particularly in Nordic countries and North America.
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A bar chart displays quarterly machinery-sector merger and acquisition activity in Europe, in number of deals, from Q1 2018–Q1 2023. The data for “number of deals” are split into deals from divestiture and deals from merger or acquisition. From 2018 to early 2020, the number of quarterly deals through mergers or acquisition tends to be at least double the number through divestiture. From late 2020 to early 2023, the number of quarterly deals through mergers or acquisition is closer to triple the number through divestiture.
Source: S&P Global; McKinsey analysis.
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To read the article, see “European machinery companies: Achieving balance through innovation,” September 6, 2023.