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Punching Out! What Does Private Equity See in the North American PCB Sector?

In the past few years, the investment by private equity (PE) firms into the PCB and EMS sectors has been increasing rapidly. Just in the past few months, APCT and Summit Interconnect have changed PE owners, American Standard Circuits was acquired by a PE firm, and Lenthor Engineering was acquired by a PE-backed firm. According to our firm’s data base, out of the top 10 independent PCB manufacturers in North America, two are public (TTM and FTG) and five are owned by PE firms. In addition, in the past few weeks, Tempo/Advanced Circuits/Whizz Systems announced an IPO via a SPAC, which shows further confidence in the direction of the PCB market. In addition to investments in the PCB market, as of today, at least 15 North American EMS firms are owned by private equity.

PE firms around the globe have raised record levels of funds over the past few years, but due to COVID and other issues, finding the right investments is a challenge. According to Private Equity Wire, a newsletter focused on the PE industry, global “dry powder” (funds raised but not yet invested) rose to a record $1.9 trillion in 2021. In addition to plentiful equity capital, interest rates have remained low, and many lenders are providing competitive terms.

Why is there so much interest in North American PCB manufacturing by PE firms? Here are some of the quotes from recent deal press releases:

• APCT/Industrial Growth Partners: “The acquisition is an ideal fit with IGP’s strategy of investing in niche industrial companies with leading market positions, significant growth opportunities and outstanding management teams.”
• Summit/Lyndsey Goldberg: “As new technologies develop and product lifecycles continue to shorten, we believe Summit will become an even more valuable partner to its customers.”
• American Standard Circuits/Gemini Investors: "ASC's manufacturing capabilities and engineering expertise, combined with our connections across various industries, is the perfect recipe for success.  We look forward to helping ASC further penetrate these markets with its comprehensive PCB offering."

Clearly, there is a lot of enthusiasm in the private equity industry for the PCB sector. There are plenty of reasons to be excited about the North American PCB market, including the following:

Manufacturing resurgence: There is a general perception that manufacturing is back.

National security issues: The pandemic exposed how dependent much of the US supply chain is on foreign suppliers, especially in critical industries.

Investment in semiconductor electronics ecosystem: There have been quite a few high-profile investments announced for semiconductor fabs. The more that chips are made in the US, the more demand there will be for domestic PC boards and other electronics.

Re-shoring: The market share of domestic PCB producers is increasing due to security concerns, IP theft concerns, and a larger focus by customers on prototypes and R&D.

Investment in automation/technology: North American PCB manufacturers have invested heavily in automation and new equipment. As the public and PE-backed producers get larger through both acquisition and sales growth, those companies will invest more in equipment and technology.

Strong military/defense budgets: U.S. defense budgets have been strong in recent years, especially in electronics. Further enforcement of ITAR rules will additionally increase government procurement.

IP concerns: Many PCB users are concerned that their designs will be copied by overseas producers. As PC boards become more complex and more critical to the end design, there will be more concerns over IP theft and the resulting increase in domestic production.

Key areas of growth: Prototypes, quick-turns, complex boards, IP-heavy boards, and the Mil-Aero sectors. North American PCB manufactures have some strong tailwinds for organic growth.

Fragmented industry: The North American PCB industry is highly fragmented. Of the 175 or so domestic producers, over 100 are below $10 million in revenue. The larger, well-financed PCB companies will continue to get bigger through acquisitions.

Electronic content increasing in all fields, increased complexity: The percentage of electronics in everything we use will continue to increase and the amount of electronics in our lives continues to go up (for example, remote monitoring of cut-sheet laminators, etc). These trends increase the demand for PCBs.

Private Equity firms have shown a huge commitment to the North American PCB market for years and this trend should continue for quite some time. PE-backed companies have provided liquidity for many PCB company owners and have helped to grow many of the top companies in the industry. The coming years should see many more PE-related deals in both the PCB and EMS industries. 

Tom Kastner is the president of GP Ventures, an investment banking firm focused on sell-side and buy-side transactions in the tech and electronics industries. GP Ventures has offices in Chicago and Tokyo, with five people in total. Tom Kastner is a registered representative of, and securities transactions are conducted through StillPoint Capital, LLC—a Tampa, Florida, member of FINRA and SIPC. StillPoint Capital is not affiliated with GP Ventures.