AutoTech deal value and volume1
Entering the year carrying several challenges triggered in 2019, the global automotive industry did not have the proper footing to deal with COVID-19. Prior to the virus outbreak, the primary players across the supply chain, from OEMs down to tier 2 and 3 suppliers, had delivered guidance for lower sales and earnings in 2020. Addressing the mounting operational challenges has become front and center, placing several M&A strategies on the backburner. While the virus is highlighting the need for technology and innovation, including self-driving cars and touchless delivery, the broader disruption is pushing out the timeline for achieving Level 4 Autonomy, which is cooling down the momentum for several automotive technologies. Despite the current pressures, transactions are getting completed and we expect an acceleration in M&A activity as the supply chains recover and the timeline for achieving increased autonomy is shortened.
Last Four Years – AutoTech M&A Activity
Last Four Quarters – AutoTech M&A Activity
Total global deal volume in Q1’20 - 13
The AutoTech sector saw 13 deal announcements in Q1’20, as compared to 14 deals in Q4’19
$0.1bn Aggregate deal value in Q1’20
The aggregate deal value in Q1’20 was $0.1bn. However, there were several small-size deals with undisclosed values
Note: AutoTech is defined to include automotive related software, automotive and fleet telematics, as well as connected and autonomous automotive technology
AutoTech Q1 2020 Transactions in Focus
WunderCar Mobility Solutions announced the acquisition of Keaz Limited, a provider of fleet management, mobile keyless vehicle access, and asset tracking SaaS
Announced Date: Mar. 27, 2020 Deal Value: N/A EV/Revenue: N/A EV/EBITDA: N/A
WunderCar Mobility Solutions announced the acquisition of Keaz Limited, which provides fleet management, mobile keyless vehicle access, and asset tracking SaaS for government entities and the transportation sector globally.
Fog Software Group announced the acquisition of ProShip Inc., a provider of multi-carrier shipping, logistics, and warehouse management software and SaaS
Announced Date: Mar. 02, 2020 Deal Value: $15mm EV/Revenue: N/A EV/EBITDA: N/A
Fog Software Group announced the acquisition of ProShip Inc., which provides multi-carrier shipping, logistics, and warehouse management software and SaaS for businesses globally. The acquisition expands Fog Group’s supply chain software portfolio.
Drew Technologies announced the acquisition of AutoEnginuity, a provider of aftermarket vehicle diagnostics systems and software
Announced Date: Jan. 03, 2020 Deal Value: $20mm EV/Revenue: 5.0x EV/EBITDA: 8.7x
Drew Technologies announced the acquisition of AutoEnginuity, which provides aftermarket vehicle diagnostics systems and software to major vehicle brands across U.S., Europe, and Asia. The acquisition will help Drew Technologies expand its products and services portfolio.
Spring 2020: AutoTech M&A and COVID-19
COVID-19 has added to the existing challenges that the global automotive industry is facing. Prior to the virus outbreak, global auto sales in 2020 were forecasted to approximate 78.8 million units, representing a 12% decline from 2019. While the overall industry is dealing with several challenges, COVID-19 is highlighting the importance of technology and innovation in the automotive industry. For example, more autonomous vehicles would increase the safe transportation of medical personnel, equipment, and supplies. Below, we have summarized some AutoTech use cases that are playing an important role in combatting COVID-19.
Select AutoTech use cases:
- Self-driving cars: COVID-19 crisis has accelerated the need and opportunity for automation in every industry, including automotive. While consumers have historically been hesitant to embrace self-driving cars, we believe this sentiment will change as the public witnesses more self-driving cars on the road, including those dealing with the crisis.2
- Autonomous shuttles: The Mayo Clinic is using Beep autonomous shuttles to move COVID-19 tests from a Jacksonville, Florida testing site to a nearby Mayo Clinic processing location. This move frees up time for Mayo Clinic staff to focus on patients rather than transportation, and reduces human interaction while transporting tests.3
- Contactless car deliveries: Tesla is planning to implement ‘touchless deliveries’ by making use of its app and cars’ smartphone connectivity in an effort to decrease the spread the virus. With the help of touchless deliveries, Tesla customers can unlock their new cars through the Tesla app at a delivery site and exchange necessary paperwork. Not only is this solution relevant during a pandemic, but it can also be used for future remote consumer purchase processes.4
- Special mobility services for medical staff: Several mobility services companies have responded to the COVID-19 outbreak. For example, DiDi Chuxing Technology Co., a Beijing-based transportation technology company, has arranged for more than 1,000 drivers to provide free emergency services to the medical workforce in Chinese cities, including Wuhan, Shanghai and Beijing. Such platforms could be expanded to address other essential workers and high-risk individuals.5
- Manufacturers switching to produce medical devices: Several automotive giants, including General Motors, Tesla, and Ford, have modified their factories in order to produce ventilators in light of supply shortages. This highlights the importance of investing in smart manufacturing solutions capable of adapting to short-term needs. As a result, we expect automotive companies to continue investing in smart industrial IoT manufacturing capabilities.4
Accumulated Weekly AutoTech M&A Deal Volume
Sources: 451Research, Capital IQ, Mergermarket and KPMG research
- M&A analysis is based on the deals announced during the respective periods. Deal value represents aggregate value for disclosed transactions. IHS Markit 25 March 2020
- Source: Mashable India, It Took A Coronavirus Outbreak For Self-Driving Cars To Become More Appealing, April 2020.
- Source: The Verge, Supervised self-driving shuttles are moving COVID-19 tests in Florida, April 2020.
- Source: CNBC, Tesla suspending production at Bay Area factory amid coronavirus outbreak, March 2020.
- Source: Intertraffic, How COVID-19 pushes mobility innovations, March 2020.