2020 M&A Wrap Up

2020 turned out to be a strong year for M&A in the PCB and EMS/PCB Assembly markets. That is surprising considering the pandemic, US election uncertainty, and restrictions on travel. Although many people were traveling within the US, at least until the current surge in COVID-19 cases, international and domestic business travel has been greatly reduced, which has certainly dampened the M&A markets.

According to our count, there have been 19 EMS deals and 7 PCB (bare board) deals in North America so far in 2020. There are several deals that we heard of that are in the works and there are probably many small deals that we have not heard of. Given the general economic climate in 2020 and the virtual prohibition on overseas deals, the number of completed deals so far is impressive.

For calendar 2018, we counted a total of 18 deals in North America in these sectors: 11 in EMS and 7 in PCB. For 2019, we counted a total of 30 deals: 22 in EMS and 8 in PCB.

Here are some of the significant EMS and PCB deals so far in 2020:

PCB Deals:

• NCAB (public company in Sweden) acquired BBG (April 2020) (PCB Distributor)
• Fralock (owned by Arsenal Capital) acquired Career Technologies USA (June 2020)
• Additive Circuits Technologies acquired Winonics (June 2020)
• Epec Technologies acquired NetVia (November 2020)
• Printed Circuits, Inc. sold to PE Group Granite Equity (Nov 2020), which also owns All-Flex

EMS Deals:

• Prime Technologies acquired TeligentEMS (January 2020) and I Technical Services (February 2020)
• Zentech (BlackBern Partners) acquires Trilogy Circuits (Jan 2020) and Camtek (March 2020)
• Princeton Technology Corp acquired by Intervala (April 2020)
• Creation Technologies (Lyndsey Goldman) acquired Applied Technical Services (May 2020)
• SigmaTron International (public company) merged with Wagz (June 2020)
• Sparton Corporation EMS Division sold to One Equity Partners (June 2020)
• Universal Electronics acquired by East West Manufacturing (Heritage Growth Partners) (September 2020)
• M-Wave International acquired by SlingShot Assembly (October 2020)
• EmeraldEMS (NewWater Capital) acquired Saline Lectronics (November 2020) and Veris Manufacturing (December 2020)

Once again, private equity was behind many of the deals in 2020 and is expected to be a major player going forward. PE firms have gained interest in the PCB and PCBA sectors and they are sitting on a lot of “dry powder” (raised funds that need to be deployed). PE firms have stepped into the place of public companies to provide liquidity to many retiring owners.

Many of the deals were completed by companies with less than $100 million in revenue. The one deal that was announced globally with over $1 billion in revenue was the USI (Taiwan) and AsteelFlash (France) transaction. Otherwise, the large, medium, and small-tier EMS and PCB companies were mostly quiet in 2020. The larger firms seem to be more interested in focusing on their core businesses rather than on growing through acquisitions.

Many of the completed deals in 2020 were most likely in discussions before the effects of COVID-19 started to hit in March/April. There was certainly a lull in activity in the March to June period, but activity seemed to pick up in July once buyers and sellers began to feel more comfortable with the current conditions. Greater use of video/Zoom calls in communications as well as video for due diligence has helped get deals done in 2020. Dealmakers will need to be flexible to complete deals going forward.

One interesting aspect of the current market is that we are not seeing a lot of distressed deals given the troubled economic environment. The PPP loans and other stimulus have certainly helped a lot of companies, and many manufacturers have been able to maintain their essential business status and stay open. We expect that more distressed deals will unfortunately come up unless the economy recovers quickly.

By our count, the number of PCB companies in North America continues to decline to approximately190 manufacturing companies and approximately 30 PCB distributors. Of the PCB companies, about 20 have over $25 million in revenue and over 100 have less than $5 million in revenue. There are probably 50 PCB shops with $2 million or less in revenue, the number of which is probably going to drop by 50% in 10 years. We expect that the larger, private equity-backed companies will continue to acquire the smaller companies, both in the PCB and EMS sectors. It is encouraging to see Schweitzer Engineering announce one new greenfield PCB shop in Moscow, Idaho, but overall, the number of PCB shops will most likely drop significantly in the coming years.

In the EMS industry, our count is about 700 companies in North America (note, this is companies, not the number of facilities, which would be greater). As more PE-backed companies make acquisitions and baby boomer owners retire, the number of companies will decrease (but the number of facilities may not change as much). The number of PCB shops that also do assemblies and/or PCB brokering will most likely increase, either through acquisitions or partnerships, as many customers prefer a one-stop option. In any case, 2021 will certainly be an interesting year.

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.