CHICAGO – Despite a drop in transactions last year, the M&A market remains strong, according to data released by an investment bank today.

The EMS sector recorded 26 transactions in 2020, down from 29 in 2019, says Lincoln International. The primary driver was favorable EMS industry tailwinds last year, despite Covid-19, the firm says. M&A opportunities remain strong, as companies are performing well due to the electronics “super-cycle.”

There were 17 consolidations in 2020, or 65% of total activity, compared to 14 in 2019, or 48% of activity.

In 2020, there were three vertical/horizontal convergences, down from four in 2019, or 12% of the total.

Private equity investments accounted for three transactions last year, compared to 10 in 2019. This represented approximately 15% of transactions in 2020, down from 34% in 2019.

There was one EMS divestiture in 2020 and none in 2019.

Last year, two transactions were categorized as diversifications, compared to one in the prior year, both representing 3% of total activity. No OEM divestitures occurred in either year.

In terms of geography, 16 of the transactions were completed in North America in 2020 (62%). In Europe, nine transactions were completed last year (35%). No transactions occurred in Asia. One cross-border transaction occurred, representing 4% of activity.

Small-tier EMS providers accounted for 88% of 2020 volume, with 23 transactions. Mid-tier providers accounted for two acquisitions (8% of activity), compared to five in 2019. Large-tier EMS providers accounted for one transaction, compared to none in 2019.

While Lincoln tracks deals around the world, in all likelihood, the number of transactions was considerably higher, as many private deals do not garner publicity.

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