Axial Market 2011 in Dust Rials Report

2011
Industrials M&A Ac3vity Report
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www.axialmarket.com | December 2011
> Execu3ve Summary

AxialMarket is the online network for the private markets, helping deal professionals and company execu<ves access
and manage people, capital and opportuni<es powered by trusted rela<onships and proprietary deal sourcing and
deal management so>ware tools.
Since January 2011, 1,266 AxialMarket Members researched and managed over 3,559 transac<ons on AxialMarket.
This report analyzes Opportuni<es brought to market within the Industrials industry ver<cal during that <me. Through
November 2011, the Industrials industry represented 32% of all opportuni<es. 818 Industrials companies came to
market, ranging in company size from $0 to over $430 million in revenue.
Feel free to share this report with colleagues, clients, and partners. If you have any ques<ons regarding the report,
email us at research@axialmarket.com.
Some of 2011s Ac3ve Buyers...
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> Table of Contents

Overview
Industrials Overview
Subsector Overview
Region Heat Map
Most Pursued Opportuni<es
Capital Goods
Deal Ac<vity Overview
Deal Ac<vity by Revenue & EBITDA
Deal Ac<vity by Region
Commercial & Professional Services
Transporta<on
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4
5
13
17
21
> 818 Companies, $9B in Revenue.

This report analyzes deal ac<vity of 818 companies brought to market,
worth a total of $9 Billion in revenue, within the Industrials industry, on
the AxialMarket network since January 2011.
Opportuni<es represent companies across each US region, and are
broken-down by industry, revenue, and EBITDA. Investment banks,
business brokers, and M&A advisory rms use AxialMarket to research
prospec<ve buyers and lenders, and deliver Opportuni<es through
AxialMarkets secure network.
Through their Transac<on Proles, nancial buyers and corporate
acquirers are able to express interest in an Opportunity by either
Pursuing or Declining the Opportunity. Since January 2011, over
1,500 Transac<on Proles have executed more than 7,000 Pursuits.
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> Industrials Overview
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> Industrial Sector Opportuni3es YTD
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The Industrials industry is comprised of three sectors and 25

subsectors.
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> Industrials Heat Map
l High l Low
Average
Average
Total Buyer Pursuits Pursuit Rate
Pursuits
(per deal) (per deal)
Average Revenue
(per deal)
Average EBITDA
(per deal)
Average EBITDA
Margin
(per deal)
Deals
Total Buyers
Sent Deals
Aerospace & Defense

Building Products
Construc<on & Engineering
Construc<on & Farm Machinery & Heavy Trucks
Electrical Components & Equipment
617
38
76
185
30
52
35,458
2,292
4,153
10,837
1,794
3,163
2,290
185
227
544
162
180
3.7
4.9
3
2.9
5.4
3.5
6.50%
8.10%
5.50%
5.00%
9.00%
5.70%
$10,549,777
$6,647,864
$9,160,635
$13,779,224
$8,183,296
$13,010,898
$1,336,537
$1,144,481
$973,509
$1,669,324
$1,235,148
$1,894,110
12.70%
17.20%
10.60%
12.10%
15.10%
14.60%
Heavy Electrical Equipment

Industrial Conglomerates
Industrial Machinery
Safety Equipment
15
7
122
25
709
386
7,035
975
26
39
612
44
1.7
5.6
5
1.8
3.70%
10.10%
8.70%
4.50%
$7,590,088
$7,968,571
$7,798,501
$4,924,995
$1,064,875
$795,600
$1,200,278
$510,499
14.00%
10.00%
15.40%
10.40%
Trading Companies & Distributors
67
4,114
271
6.60%
$12,611,788
$1,224,693
9.70%
Sector (Subsector)
Capital Goods
371
20,696
1,309
3.5
6.30%
$8,933,570
$1,238,697
13.90%
Commercial Prin<ng
Diversied Support Services
31
118
1,749
7,324
129
460
4.2
3.9
7.40%
6.30%
$7,175,165
$10,702,015
$1,065,001
$1,535,772
14.80%
14.40%
Environmental & Facili<es Services
96
4,856
314
3.3
6.50%
$7,695,060
$1,390,222
18.10%
Human Resource & Employment Services

Oce Services & Supplies
Research & Consul<ng Services
36
17
62
1,675
1,151
3,243
94
94
178
2.6
5.5
2.9
5.60%
8.20%
5.50%
$7,932,110
$12,027,962
$7,212,091
$754,571
$1,391,543
$799,891
9.50%
11.60%
11.10%
Security & Alarm Services
11
698
40
3.6
5.70%
$13,925,456
$1,040,460
7.50%
Air Freight & Logis<cs

Airlines
Airport Services
Highways & Railtracks
Marine
Marine Ports & Services
Railroads
163
40
11
8
3
16
8
4
10,360
2,526
914
510
223
725
372
344
679
193
61
32
13
31
16
26
4.2
4.8
5.5
4
4.3
1.9
2
6.5
6.60%
7.60%
6.70%
6.30%
5.80%
4.30%
4.30%
7.60%
$16,091,587
$12,469,067
$16,104,856
$10,322,830
$19,136,402
$8,837,048
$7,450,040
$28,533,724
$1,600,337
$1,238,415
$1,502,440
$1,135,612
$1,488,100
$923,861
$1,173,351
$2,997,652
9.90%
9.90%
9.30%
11.00%
7.80%
10.50%
15.70%
10.50%
Trucking
73
4,746
307
4.2
6.50%
$20,436,887
$1,987,441
9.70%
1,151
66,514
4,278
3.7
6.40%
$10,813,636
$1,342,359
12.40%
Transporta3on
Total
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*The color scales above are across all sectors by column.
> Industrials Heat Map Analysis
There is a rela<ve surplus of Opportuni3es in Construc3on & Engineering, and a rela<ve shortage in Industrial
Conglomerates.
Transporta3on accounted for the highest average revenue per Opportunity at $16M, buoyed by both
Railroads and Trucking at $28.5M and $20.4M, respec<vely.
The average Pursuit rate per Opportunity across all subsectors is 6.4%, and all three sectors mirror this gure.
Heavy Electrical Equipment has the lowest average Pursuit Rate of only 3.7%.
The Commercial & Professional Services sector averaged less than $9M in revenue per Opportunity, yet it has
included the most protable companies, with a sector-wide average EBITDA margin of almost 14%, 1.2
percentage points higher than that of Capital Goods and four percentage points higher than that of
Transporta<on.
Within Commercial & Professional Services, the Environmental & Facili3es Services subsector includes the
most protable companies, maintaining an average EBITDA margin of 18%. Highways & Railtracks and
Security & Alarm Systems were the least protable subsectors, both with average EBITDA margins less than 8%.
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> As usual, good companies are in short supply.

Supply
Demand
Pursuits per
Opportunity
Total Opportuni3es
YTD
Construc<on & Farm Machinery & Heavy
Trucks
5.4
5.0
Aerospace & Defense
4.9
96
4.8
76
Building Products
Trucking
4.2
73
Trucking
Commercial Prin<ng
4.2
67
4.0
62
3.9
52
3.5
40
3.3
38
Aerospace & Defense
Building Products
3.0
36
2.9
31
Commercial Prin<ng
2.9
30
Construc<on & Farm Machinery & Heavy

Trucks
2.6
25
Safety Equipment
Safety Equipment
1.8
185
122
118
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> Deal Ac3vity by US Region

Sector (Subsector)
Capital Goods
Aerospace & Defense
Building Products
Construc<on & Farm Machinery & Heavy Trucks
Heavy Electrical Equipment
Safety Equipment

Commercial Prin<ng
Oce Services & Supplies
Security & Alarm Services
Transporta3on
Airlines
Airport Services
Highways & Railtracks
Marine
Marine Ports & Services
Railroads
Trucking
Total
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l High l Low
Midwest
Northeast
South
West
129
4
10
30
15
11
3
1
37
2
16
73
5
16
23
9
4
16
0
29
7
2
2
0
2
0
0
16
231
85
5
12
24
2
8
2
0
19
0
13
68
4
21
19
8
3
12
1
24
7
0
0
0
2
2
1
12
177
212
16
29
69
3
15
9
2
37
14
18
127
10
46
32
11
5
19
4
57
14
4
4
1
7
5
0
22
396
114
11
17
38
4
10
0
0
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2
13
77
12
23
15
6
4
11
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32
8
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Conclusion

The South has been the most

ac<ve region in the US with 34%
of the Industrials Opportuni<es.
Construc<on & Engineering,

Environmental & Facili<es
Services, and Trucking were
consistently ac<ve across the
en<re US.
Safety Equipment Opportuni<es

were heavily concentrated in the
South, while Construc<on & Farm
Machinery & Heavy Trucks were in
the Midwest.
*The color scales above are contained within each sector.
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10
> Most Pursued Opportuni3es

The Top 20 Industrials Opportuni<es represented a wide range of subsectors and sizes. Below is a redacted summary of
the most demanded Opportuni<es, as determined by Pursuit Rate.
25% of the Top 20 Industrials Opportuni<es fall within the Industrial Machinery subsector.
The Air Freight & Logis<cs subsector represented both the highest and lowest EBITDA Opportuni<es, with $7M and
($545,000), respec<vely.
Opportunity
Pursuit
Rate
Revenue
EBITDA
Industrials Subsector(s)
Specialized logis<cs
42.9%
$23,600,000
$3,500,000
Gas detec<on and

sensors
33.3%
$13,000,000
$1,600,000
Trading Companies & Distributors,

Trucking
Industrial Conglomerates, Industrial
Machinery, Safety Equipment
Mine equipment
maintenance
Crop machine design
31.7%
$2,700,000
$950,000
27.7%
$13,600,000
$2,400,000
Construc<on & Farm Machinery &

Heavy Trucks
Retail warehouse
logis<cs
25.3%
$30,000,000
$7,000,000
Air Freight & Logis<cs, Diversied

Support Services, Trucking
Supply chain
management
Machine components
25.0%
$22,000,000
($525,000)
24.3%
$11,000,000
$3,350,000
Aerospace tools
24.1%
$5,000,000
$1,540,000
Aerospace & Defense
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11
Opportunity
Pursuit
Rate
Revenue
EBITDA
Industrials Subsector(s)
Commercial contractor
24.0%
$2,700,000
$550,000
Chemical distributor
23.8%
$28,100,000
$3,800,000
Window and door

distributor
21.9%
$3,000,000
$140,000
Building Products
Recycling equipment
21.7%
$12,000,000
$3,600,000
Reverse, recycling
logis<cs
21.4%
$14,000,000
$1,800,000
Gaming devices
21.3%
$39,200,000
$3,700,000
Technology asset
management
20.9%
$1,500,000
$450,000
Wire and cable

manufacturer
20.2%
$20,500,000
$1,700,000
Industrial Machinery, Trucking
Marke<ng energy
eciency
20.0%
$24,250,000
$3,100,000
Niche electrical
components
19.3%
$9,600,000
$1,900,000
High pressure wash

systems
18.4%
$840,000
$38,000
17.3%
$2,500,000
$375,000
Industrial and mining

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supplies
> Capital Goods
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13
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> Capital Goods: Deal Ac3vity

Overview
Although Construc<on &

Engineering was the most
ac<ve of all subsectors, it
exhibited a downward trend
from Q1 to Q4.
Building Products and Electrical
Components & Equipment
grew, respec<vely, 100% and
150% from Q1 to Q3.
Industrial Machinery was more
stable than Construc<on &
Engineering in the second half
of the year, and is close to
surpassing the laker in deal
ow in Q4.
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> Capital Goods: Deal Ac3vity by Revenue & EBITDA
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The US West South Central was the only

region to grow every quarter in Pursuits
per Opportunity.
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The Northeast and the East South Central

regions were comparable in Pursuits per
Opportunity from Q1 to Q3, though the
former lags the laker in Q4.
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There were more Canadian and

Interna<onal Opportuni<es within the
Capital Goods sector than either
Commercial & Professional Services or
Transporta<on.
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South Atlan<c region accounted for the
most Opportuni<es.
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> Capital Goods: Deal Ac3vity by Region
16
> Commercial & Professional

Services
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17
> Commercial & Professional Services:

Deal Ac3vity Overview
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Diversied Support Services was

the most buoyant subsector
overall and the most ac<ve in
every quarter beside Q1. It has
already, in Q4, surpassed its total
in Q3.
deal ac<vity has increased 150%
from the rst half of the year to
the second.
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Diversied Support Services, though

seeing a strong upward trend in the
amount of Opportuni<es coming to
market, trended downward in both
revenue and EBITDA per Opportunity.
Contrarily, in Human Resources &

Employment Services, though the
number of Opportuni<es per quarter fell
since Q1, the sizes of the Opportuni<es
by revenue and EBITDA grew.
Oce Services & Supplies in Q2

accounted for the highest EBITDA per
Opportunity, as well as the highest
average EBITDA margin at 27%.
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The US East South Central region

consistently accounted for the most
Pursuits per Opportunity in 2011, the
only region to average over 10 Pursuits
per Opportunity in any quarter, a feat
that occurred in both Q2 and Q4 so far.
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brought to market YTD.
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> Commercial & Professional Services: Deal

Ac3vity by Region
20
> Transporta3on
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21
> Transporta3on: Deal Ac3vity

Overview
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Transporta<on, the least ac<ve of the

three sectors, has demonstrated an
increase in deal ow in Q4, exceeded
its Q3 total, a trend also represented in
Air Freight & Logis<cs.
Trucking rebounded in Q3 from a weak
Q2 and is on pace to stabilize or show
growth from Q3 to Q4.
Marine Opportuni<es were perfectly
stable across all four quarters.
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> Transporta3on: Deal Ac3vity by Revenue & EBITDA
From Q1 to Q3 Airlines saw 12% growth in

average revenue, but average EBITDA
stayed rather at, and thus the average
EBITDA margin fell from 19.4% to 5.6% over
that period.
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Q1 to 5.6% in Q3 before rebounding in Q4
to 10.7%.
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In Q4 the US Middle Atlan<c region has

seen each Opportunity average an
outstanding 24.5 Pursuits.
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Canada has seen a rela<vely large amount

of deal ow YTD in the Transporta<on
sector, including a strong Q4.
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concentrated in the US South Atlan<c
region throughout the year.
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24
> Want to learn more about AxialMarket?

Let us know at hdps://www.axialmarket.com/get-demo/
About Us
AxialMarket is the online network for the private markets, giving deal professionals and company execu<ves access to
people, capital and opportuni<es based on trusted and powerful rela<onships and business development and rela<onship
management tools.
For more informa<on please contact:
Jaime Romero
VP, Marke<ng
AxialMarket, Inc.
646-616-8955
jaime.romero@axialmarket.com
www.axialmarket.com
On Twiker: @AxialMarket
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25

Axial Market 2011 in Dust Rials Report

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2011

Industrials M&A Ac3vity Report

www.axialmarket.com | December 2011

> Execu3ve Summary

Some of 2011s Ac3ve Buyers...

> Table of Contents

> 818 Companies, $9B in Revenue.

> Industrials Overview

> Industrial Sector Opportuni3es YTD

The Industrials industry is comprised of three sectors and 25

> Industrials Heat Map

Aerospace & Defense

Heavy Electrical Equipment

Trading Companies & Distributors

Commercial & Professional Services

Environmental & Facili<es Services

Human Resource & Employment Services

Security & Alarm Services

Air Freight & Logis<cs

*The color scales above are across all sectors by column.

> Industrials Heat Map Analysis

> As usual, good companies are in short supply.

Diversied Support Services

Aerospace & Defense

Environmental & Facili<es Services

Air Freight & Logis<cs

Trading Companies & Distributors

Trading Companies & Distributors

Research & Consul<ng Services

Diversied Support Services

Electrical Components & Equipment

Electrical Components & Equipment

Air Freight & Logis<cs

Environmental & Facili<es Services

Aerospace & Defense

Human Resource & Employment Services

Construc<on & Engineering

Research & Consul<ng Services

Construc<on & Farm Machinery & Heavy

Human Resource & Employment Services

Construc<on & Engineering

> Deal Ac3vity by US Region

Commercial & Professional Services

The South has been the most

Construc<on & Engineering,

Safety Equipment Opportuni<es

*The color scales above are contained within each sector.

> Most Pursued Opportuni3es

Gas detec<on and

Trading Companies & Distributors,

Construc<on & Engineering

Construc<on & Farm Machinery &

Air Freight & Logis<cs, Diversied

Air Freight & Logis<cs

Aerospace & Defense

Construc<on & Engineering

Trading Companies & Distributors

Window and door

Environmental & Facili<es Services

Electrical Components & Equipment

Diversied Support Services

Wire and cable

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