CHICAGO – M&A activity in the EMS sector stalled in the second quarter, with just three deals closing in the period, according to a new report. The three deals included two consolidations and one vertical/horizontal convergence.

No OEM or EMS divestitures took place, and private equity groups stayed on the sidelines during the period as well, Lincoln said.

Some seven transactions were recorded in the same period of 2019, and nine in the first quarter, according to Lincoln International.

Two of the deals took place in the US/Canada and one in Europe. In terms of transaction size, small-tier EMS providers accounted for all the second quarter transaction volume.

The three deals included Intervala’s acquisition of Princeton Technology Corp., Variosystems’ purchase of  Solve GmbH, and Creation Technologies’ buyout of Applied Technical Services. One Equity Partners also announced the acquisition of Sparton’s Manufacturing and Design Services unit, but that deal closed in July.

Covid-19 has slowed many industries, but the EMS industry has shown resiliency in the current market conditions, says Lincoln. EMS organizations are continuing operations and adapting, as necessary. While M&A activity was lower for the last quarter, Lincoln sees significant opportunity for further investment in this space, providing for additional M&A later this year.

Lincoln added that EMS players have been bucking the economic trends and delivering promising results, especially small-tier EMS players and those focused on high reliability and critical industries.

Overall, the EMS industry exhibits positive trends supported by the ongoing electronics super-cycle that is continuing to drive demand for electronics, says Lincoln.

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