Insight

Automotive M&A Quarterly Newsletter Q4 2021

Read more about M&A activity in the automotive sector

Ford Phillips

Ford Phillips

Managing Director, KPMG Corporate Finance LLC

+1 312-665-1537

Automotive Industry M&A Synopsis and Key takeaways

Landmark M&A Announcement

Unifrax, a Portfolio Company of Clearlake Capital, Acquired Lydall, a Provider of Engineered Products for Assistance In Noise and Heat Abatement Within the Transportation and Industrial Sectors
Enterprise Value (EV)
$1,357 million
EV / Revenue
1.72x
EV / EBITDA
15.3x


On June 21, 2021, Unifrax announced an agreement to acquire Lydall in a transaction with a total enterprise value of approximately $1,357 million. Lydall’s acquisition will expand Unifrax’s product portfolio to include thermal-acoustical solutions, performance materials, and technical nonwovens.

The Unifrax-Lydall combination creates a one-of-a-kind specialty materials platform capable of driving transformative impact in the spaces we all care about, areas including fossil fuel reduction, improved energy storage, and cleaner air. With our expanded portfolio and nearly doubled global footprint, we are poised to deliver even more cutting-edge, market-leading products and innovation to customers around the world. We’re just getting started, and we’re excited about the opportunities ahead.”
- John Dandolph, President & Chief Executive Officer of the Combined Entity

Key takeaways

The highly fragmented NVH market will attract interest from industry consolidators looking to gain scale and acquire capabilities to address ongoing trends, as well as from financial sponsors seeking to invest in the automotive sector

  • The rise of EVs, which lack the noise masking effect of traditional ICEs, presents new challenges for NVH management. Additionally, high-frequency tonal motor noise is offering new opportunities for suppliers to provide EV-specific solutions and thereby achieve higher growth rates
  • With lightweighting being a significant industry driver, NVH suppliers are under constant pressure to meet mounting demand from OEMs for solutions that ensure quieter cabins while also lowering weight and fuel consumption
  • Due to thin margins in the NVH industry, minimizing scrap is a major driver of profitability. To achieve cost benefits, suppliers are investing in recycling capabilities. This, in turn, would also help address current sustainability trends
  • NVH providers typically contract directly with OEMs or Tier-1 suppliers. This leads to higher customer concentration as the automotive industry, one of the largest end markets, is heavily consolidated. While the underlying dependency is often mutual, venturing into other sectors can help reduce concentration risks

Valuation Observations and Sector Performance

  • The valuation multiples for NVH and diversified auto parts suppliers have slightly decreased over the previous quarter
At the end of Q4’21 the average EV / LTM EBITDA multiples were NVH Suppliers
Diversified Automotive
6.2x (0.1x) Q-o-Q
8.1x (0.3x) Q-o-Q


We hope you find this information valuable, and as always, feel free to reach out if you would like to discuss in further detail. To read the full report, download the PDF below.


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