The manufacturing software landscape has seen a significant transformation in acquisition dynamics, as shown in the charts below. Strategic buyers dominated historically (58% of deals in 2021), but private equity has surged forward, accounting for a remarkable 54% in 2022 and a commanding 63% in 2023, marking a clear shift.
This change can be attributed to several factors. Private equity, with an abundance of record dry powder at their disposal, is strategically positioning itself to capitalize on the enticing attributes of manufacturing software companies. The allure lies in the integration of Industry 4.0 technologies and AI, particularly in domains like EAM, MES, QMS, and SCM, which enhance predictive and prescriptive capabilities, offering immense potential for disruptive innovation.
This transformative landscape has witnessed significant deals by both strategic and private equity buyers. Examples include Siemens’ acquisition of Brightly Software and Rockwell’s purchase of Fiix, showcasing the evolving manufacturing software investment scene. With a substantial total addressable market (TAM) reinforcing the sector’s appeal, private equity investors and strategic buyers flock to explore lucrative opportunities.