to hold their own against larger , more established groups , but are often winning over customers with their solutions . As a result , the larger groups need to address how they compete and whether an acquisition of a smaller tech firm would redress the balance with customers . However , these smaller companies are often owner-managed startups and have a very different ethos and set of values than the acquirer .
But , importantly , they are also likely to have a different opinion on their valuation than established businesses , which can be a substantial hurdle to overcome . Typically , smaller , technology-rich targets expect to be valued in anticipation of the opportunity they represent . This is a hard sell for traditional conservative industrial groups , which are used to paying modest historical multiples of profit rather than future multiples of revenues . This is the area where an experienced financial advisor is most able to help .
Another key issue to contend with for M & A is the drive to automation as a replacement for human workers . A recent report from the UK think tank , Centre for Cities , indicated that a total of 3.6mn UK jobs could be replaced by machines . In fact , it predicted that jobs at the highest risk of replacement included retail sales , customer services , administration and warehouse work .
As key players seek to solidify their strategic positioning , span value chains and create growth opportunities for unique value propositions , the pace of investing and M & A activity is expected to accelerate . The sheer diversity of Industry 4.0 is opening up a myriad of opportunities . However , it also produces hurdles that must be overcome for M & A in manufacturing to be successful .
The ultimate Industry 4.0 takeaway is this : Companies across the manufacturing spectrum can ’ t afford to stand still . If you want to be at the forefront , you must embrace technological change and seek to integrate new technologies with your traditional practices .
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