BGL: PE Targeting the Automotive Aftermarket

Investment bank Brown Gibbons Lang has just published a new report, Automotive & Aftermarket Insider: The Deal Engine, that looks at recent developments and changes occurring in the automotive industry. A link to download a PDF copy of the report is available below.

Andrew Petryk, a managing director and head of industrials; and Todd Cassidy, a managing director and head of automotive & aftermarket, authored the report for BGL. Mr. Cassidy joined BGL in December 2019 to lead the firm’s expansion into the automotive sector. Earlier in his career he led the North American automotive and aftermarket practice at Raymond James and William Blair.

According to BGL, private equity funds are aggressively seeking automotive aftermarket assets, with consolidation a key strategy to grow market share. As BGL states, industry fragmentation is conducive to acquisitive growth, with sponsors pursuing buy-and-build strategies to create more scalable platforms for these businesses.

In addition, technological developments and changing consumer preferences are shifting vehicle demand and supplier business models. Consumers are foregoing passenger cars for trucks and SUVs with lower gas prices, improved vehicle design, and a stronger economy among the major drivers of the shift. For original equipment manufacturers, this move is giving way to wider margins and encouraging healthy aftermarket sales as the higher-content, higher-priced vehicles are more favorably disposed to customization.

Automotive companies are making the transition to electric vehicles (EV) and hybrids, driven by government policy mandating compliance with tightening emissions standards and bans on the sale of new petroleum burning vehicles. Major automakers have committed billions, announcing major investments in electrified models and autonomous vehicle technology to accelerate EV adoption. Investors are seeking attractive niches in the evolving automotive landscape to participate in this market growth.

Another trend identified by BGL is that significant capital is being deployed in autonomous vehicles and new active safety technology. More than $100 billion has been invested in new mobility over the last four years.

Brown Gibbons Lang is a mid-market investment bank that specializes in mergers and acquisitions, divestitures, capital markets, financial restructurings, valuations and fairness opinions. The firm was founded in 1989 and has investment banking offices in Chicago, Cleveland, and Philadelphia.

Click HERE to download your free copy of Automotive & Aftermarket Insider: The Deal Engine.

© 2020 Private Equity Professional | February 3, 2020

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