Fluid Handling Industry Performance Predictions for 2021

Economists expect worldwide GDP to return to a significant rate of growth in 2021.

Global Equity Consulting

01/27/2021

Here are the factors shaping the outlook for M&A activity and fluid handling industry performance for 2021.

The following factors are likely to shape the M&A activity and fluid handling industry performance in 2021:

While revenues and profitability took a hit in 2020, cash generation was generally strong.

Economists expect worldwide gross domestic product (GDP) to return to a significant rate of growth in 2021. For example, The Conference Board¹—a nonprofit economic think-tank—is projecting worldwide GDP growth to be 4.7% in 2021, led by Asia and Europe.¹

Fluid handling industry companies expect plant utilization rates will improve starting at least in Q2 2021. As workforces return, that will lead to catching up on deferred maintenance and driving an improvement in short-cycle maintenance, repair and operations (MRO) spending.

Fluid handling industry companies expect capital project spending will start to resume in the second half of 2021.

The interest in acquisitions remains strong and fluid handling industry companies are ready to resume actively pursuing transactions as soon as they are able to make site visits, have management meetings and resume other due diligence activities.

Companies will continue to assess their portfolios and take advantage of the strong M&A market to divest non-core assets using the proceeds in many cases to reposition their portfolio around a new strategic direction.

Baby boomer private business owners will now have a heightened sensitivity to the ongoing risk of ownership causing more of them to be open to transitioning ownership of their business.

Thomas E. Haan is the principal of Global Equity Consulting LLC, providing business development and M&A advisory services to midsize manufacturing, distribution and service companies in the fluid handling industry. He is also an operating director for City Capital Advisors, an M&A advisory firm based in Chicago. Haan has more than 40 years of experience in senior management and advisory roles for manufacturing, distribution and service companies in fluid handling industry. He has served as an appointee of the U.S. Secretary of Commerce on the Michigan District Export Council, past president of the Fluid Sealing Association, as well as chairman of the Associate Member Council and a member of the Board of Directors of the Hydraulic Institute. thaan@globalequityconsulting.net.