Enterprise Value Increases to Drive Robust Automotive Supplier M&A Activity

Source: Conway MacKenzie

While economic, social, and pandemic-related factors continue to impact many businesses and create global uncertainty, a contrarian—that is, optimistic—viewpoint is emerging for the health and value of automotive suppliers over the next 24 months. Considering the sector’s history of a strong reemergence from the 2008-2009 economic crisis, automotive suppliers are more resilient and flexible than many give them credit for. Data analysis and recent interactions with numerous automotive suppliers, industry lenders, and private equity firms also suggest a favorable route ahead.

Although the industry is on a long-term path toward electrification and connectivity, the near-to mid-term dynamics offer equally pressing importance. It is important to consider these factors related to revenue, profitability, resulting enterprise value and how these elements may translate into increased mergers and acquisitions (M&A) activity.

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