Ballooning budgets boost manufacturing IoT acquisitions

by Michael Hill

Buyers in the manufacturing space are opening their wallets for Internet of Things (IoT) targets because they can. IoT budgets in the vertical are increasing and, as a result, companies involved in the manufacturing industry are spending more on purchases than other IoT-friendly verticals. And targets developing IoT technologies for manufacturing and industrial applications are garnering more attention.

Since 2017, acquirers in the manufacturing vertical have spent $863m on IoT deals, compared with markets such as retail, which has spent $450m on IoT targets over the same period, and healthcare, which has spent $291m. Moreover, purchases of IoT technologies for manufacturing and industrial applications continue to tick up, with 12 such vendors having been acquired this year, matching the previous full-year record, according to 451 Researchs M&A KnowledgeBase.

Along with the steady increase, the types of transactions getting done have shifted toward IoT targets that are factory-floor-ready, compared with the middleware- and consulting-focused deals that previously dominated the vertical. In other words, companies selling tech to manufacturing businesses are seeking targets that solve a specific business problem, rather than software or service providers with generalized IoT tech or IoT expertise.

Just last month, in fact, SKF, a 112-year-old manufacturer of bearings and rotational equipment, bought predictive maintenance SaaS specialist Presenso to help users of its products keep tabs on equipment performance. And earlier this year, industrial health and safety management software vendor Sphera Solutions snapped up Petrotechnics for its operational risk management expertise, giving the buyer the ability to recognize risks to business processes using real-time data drawn from IoT devices.

The increasing M&A activity is buoyed by expanding IoT budgets in manufacturing. Manufacturers are spending more on IoT across the board. According to 451 Research’s Voice of the Enterprise: IoT, Budgets & Outlook, the average manufacturing respondent said their IoT budget would rise by 44% in the next 12 months, up seven percentage points from when the same question was asked of them one year prior.

Figure 1: IoT tech M&A spending by vertical
Source: 451 Research’s M&A KnowledgeBase
Posted in M&A