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Punching Out: North America PCB, EMS M&A Review: The First Six Months of 2024

M&A deal discussions were fairly strong in the North American EMS and PCB sectors in the first half of 2024, but for various reasons, the number of actual closed deals was lower than in the first half of 2023. For example, there were just two PCB deals that closed in the first six months of 2024, both of which were consolidations that were not announced publicly—compared with seven PCB deals completed in the same period in 2023. On the EMS side, eight North American M&A deals were closed through June, compared with eight deals in the first six months of 2024.

The low number of closed deals in the PCB sector is because of several factors. Revenues in 2024 are down or flat for many PCB shops. According to IPC, PCB sales were up just 1% in June from the previous year and the book-to-bill ratio was just 0.95. We have heard from many shops that orders picked up in the past few months, so perhaps M&A deals will follow once confidence is fully restored. Interest rates in the U.S. remain relatively high, which does not help the deal environment. The pending U.S. presidential election and potential trade conflict with China create some uncertainty. On the other hand, deal activity is high, meaning that a lot of the smaller North American shops are looking to do something strategically. This is mostly because of demographics. Owners are generally looking toward retirement. There is a lot of private equity money invested in the sector and an increasing amount of interest from overseas PCB manufacturers, so eventually, the deals will start closing.

On the EMS side, there are plenty of deal discussions too, as well as a good number of deal closings.  Here are the announced deal closings for the first half of 2024:

• Kaynes Technology (India) acquired Digicom Electronics (CA) for $2.5 million in January
• Hartwood Point (PE) acquired Accutronics (MA) in January
• Tide Rock Holdings (CA) acquired Cablenet Aerospace (CO)  in April
• kSARIA (MA, owned by Behrman Capital) acquired Charles E Gillman Inc. in April
• (Note: kSARIA itself was subsequently sold to ITT in August 2024)
• OneMonroe (MI) acquired GMA Manufacturing (AZ) in April 2024
• EmeraldEMS (Crestview) acquired Optimum Design Associates (CA) in May 2024
• Flex (public) acquired FreeFlow (TX) in May2024
• ACDI acquired QinetiQ (VA) in May 2024

Although not an M&A deal, Aimtron Electronics held its IPO in India in June

For the rest of 2024–largely because of demographics in the PCB and EMS industries–the number of deals should continue to be strong due to owners retiring. PE firms have plenty of liquidity, which should keep deals rolling. The effects of re-shoring, government incentives, and the continued increased percentage of electronics in everything should keep investors interested in the sector. North American IPOs in the sector do not seem to be making a comeback at all, but larger companies can merge or go private via deals with PE firms, so that should keep investments coming into the industry.

Aside from Jabil’s three acquisitions in 2023 and Flex’s purchase of FreeFlow in May, larger public companies have not been very active in the PCB and EMS sectors for several years. Until recently, public companies were more concerned about weathering the storm than doing deals. Now that the component shortage has eased somewhat and inventories are more under control, one would think that a few big deals would occur.

Although there is some talk about greenfields in North America, the net number of PCB and EMS shops continues to decline. Our database is at around 150 PCB shops and 900 EMS shops (not counting companies that focus on wire harness/cable assembly). It has been a long time since we “discovered” a new PCB shop that we did not previously know, but we still hear about ”new” (to us) EMS companies from time to time. I expect that the number of companies in these sectors will continue to decline by about five to 10 PCB shops and 15–20 EMS shops per year as larger shops acquire the smaller ones. This trend should be good for the industry, as the larger shops will be better equipped to invest in the newest machinery, technology, systems, and training.

As always, owners who are thinking of selling in the next few years should start to prepare, because you never know when the next wave of M&A may come.

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.