More Manufacturers Interested in Mergers and Acquisitions and Joint Ventures, Says BDO Study
Manufacturing CFOs are gearing up for a more proactive approach in 2025, according to a recent report from BDO, an accounting and advisory firm. The report reveals that more than one in five CFOs are considering acquisitions this year, marking an increase from the previous year. Additionally, half of these finance leaders are planning to roll out new products, showcasing a strong push towards growth and expansion within the industry.
The ambitious outlook of CFOs in the manufacturing sector is fueled by the anticipation of revenue growth, with 68% of respondents expecting an increase in revenue this year. This positive sentiment represents an eight-point surge from the previous year’s forecast. A key driver behind these optimistic projections is the heightened interest in acquisitions and joint ventures, with 22% planning to acquire other companies and 25% eyeing potential partnerships, signaling a shift towards strategic collaborations to drive growth.
Despite the challenges faced in 2024, such as unmet demand expectations and persistently high input costs, manufacturing companies have demonstrated resilience and adaptability. Bill Pellino, a tax principal at BDO, emphasized the industry’s strong foundation and the enduring spirit of manufacturing leadership teams in navigating disruptions and uncertainties. The lessons learned from previous setbacks have paved the way for a more robust and agile approach in the current year.
The increased appetite for acquisitions and joint ventures indicates a proactive stance among manufacturing executives, surpassing the levels seen in previous years. Pellino attributes this rise to a larger pool of middle-market companies seeking strategic partnerships or exits, with private-equity firms emerging as prominent buyers. While interest rates may temper deal activity to some extent, the overall trend towards inorganic growth strategies remains steadfast.
Key findings from the BDO survey highlight a strategic shift towards expansion and innovation within the manufacturing sector:
– Only 10% of CFOs are considering divestitures or carve-outs, showcasing a stronger focus on growth and consolidation.
– 37% of manufacturers are planning to invest in U.S. expansion, signaling a commitment to domestic operations and market presence.
– A significant portion of executives (51%) are planning new product launches, accompanied by dynamic pricing strategies to navigate cost pressures.
– The adoption of artificial-intelligence tools and proprietary platforms is on the rise, with over 60% of firms leveraging AI technology to enhance operations and forecasting capabilities.
In a landscape characterized by cost pressures, market volatility, and evolving customer demands, manufacturing companies are leveraging technology and strategic partnerships to drive efficiency, innovation, and profitability. The emphasis on data-driven decision-making and agile operations underscores the industry’s resilience and commitment to sustainable growth in the face of challenges. As manufacturing CFOs navigate the complex terrain of the market, their proactive approach and strategic vision are poised to shape the future trajectory of the sector.
