The race to acquire technology fueled a rising number of M&A transactions in 2017, according to the annual report from the Automotive Aftermarket Suppliers Association (AASA) and Jefferies LLC: Automotive Aftermarket Investment Report.
OEMs, Tier 1 suppliers, non-automotive technology companies, private equity firms and select aftermarket players all placed bets on various auto-tech companies in 2017, according to the report. These acquisitions highlight four main auto-technology themes:
- Changing Personal Mobility
- Autonomous Driving
- Vehicle and Driver Connectivity
- Increased Vehicle Electrification
Six of the past seven years have posted more than 100 M&A aftermarket transactions, and 2017 was a strong year for M&A transaction volume with more than 160 transactions occurring in North America and Europe. The report from AASA and Jeffries shows that the industry remains attractive to both strategic and financial buyers due to favorable industry tailwinds, which include a growing and aging car parc, increasing vehicle utilization and miles driven, and low fuel prices (although gas prices are now on the rise). Complementing these factors are a healthy U.S. economy, rising disposable income and inexpensive debt.
In 2017, approximately 83 percent of transactions involved a strategic buyer, a level of strategic involvement that is in line with the past five years’ average. Of that 83 percent, approximately 40 percent of the acquirers were private equity-backed. Of deals completed in 2017, 37 had disclosed prices – 19 of which had total transaction value exceeding $250 million.
The 2017 Automotive Aftermarket Investment Report annual review of automotive aftermarket mergers and acquisitions and equity activity is provided to AASA members by Jefferies LLC and AASA. The purpose of this publication is to touch on notable transactions that occurred in 2017 and discuss deal trends in the aftermarket landscape.
