CHICAGO – Five EMS transactions were recorded in the second quarter, representing an increase from the four recorded in the second quarter of 2022 but a decrease from the nine transactions recorded 2021's second quarter, according to Lincoln International.

EMS consolidations accounted for two of the transactions in the quarter, or 40% of total activity, representing a decrease in the number of EMS consolidation transactions from the second quarter of 2022 and 2021, but the same as those recorded from the second quarter of 2020.

Two vertical/horizontal convergences and one original equipment manufacturer divestiture was recorded in Q2 2023, representing 40% and 20% of the total activity for the quarter, respectively. Diversification into EMS, EMS divestitures and private equity investments did not account for any transactions in the quarter.

By geography, Europe had two transactions, representing 40% of the total transactions, while the US/Canada had one transaction and cross-border had one transaction, representing 20% and 20% of total transaction activity in the quarter, respectively. Asia was also recorded for one transaction, representing the balance of EMS deal geography in 2023.

In terms of transaction size, small-tier EMS providers accounted for three of the transactions, or 60% of the transaction activity, while the remaining two transactions were categorized as mid-tier EMS deals, which represented the remaining 40% of outstanding EMS deals recorded.

Lincoln International's quarterly report found that while component shortages have lessened the ripple effects of both long-lead time items and inventory, re-evaluation by customers has resulted in some volatility on EMS forecasts. Despite these challenges, the EMS sector underscores its resilience through adaptive strategies.

Additionally, demand has not slowed from most end markets with robust product development and increasing electronics content across the sector. Resourceful supply chain management practices, including diversifying component sources and fostering greater resilience, emerged as a key focus. This adaptive approach, coupled with strategic collaborations and agile response mechanisms, positions the EMS sector to exhibit more positive future results than the market as a whole.

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