3D opportunity for consolidation: Top three M&A themes in 3D printing

By Hemnabh Varia, Monika Mahto, and Negina Rood

A recently published Deloitte report titled “Matching strengths: A new wave of corporate alliances may be on the horizon,” highlights how business uncertainties stemming from globalization, changing demand patterns, and technological developments seems to have led to increased mergers and acquisitions (M&A) activity in the US in the past three years.1 These trends have touched the additive manufacturing (AM) sector—an area we’ve covered in depth over the years. M&A deals in AM are increasing in size and pace, particularly in the US, where many non-traditional 3D companies have entered the market.

Among different advanced technologies, the AM M&A landscape appears primarily driven by three trends:

  1. Rapid acceleration in AM M&A activity, along with increased deal value 

    The AM industry has experienced increased consolidation in the last two decades, both in terms of growth in the number of deals and sharp increases in total deal value. This increased acquisition activity appears to be the result of companies seeking to acquire capabilities in niche AM technologies, expand into new geographies, or achieve forward and backward integration in their supply chains. As we pursued to understand trends within the AM M&A market, we sought to identify and review the data related to completed deals by 3D printing companies targeting specific technologies or market applications, as well as acquisitions by large and traditionally non-3D printing companies such as General Electric, HP, and private equity firms during the period 1998-2016.As shown in Figure 1, we were able to identify 102 deals that took place from 1998 to 2016, amounting to over $5 billion of disclosed deal value.3 Out of the total deals, the number of deals from 2007-2016 were about four times higher as compared to that from 1998-2006, and out of that, 60 percent of deals were triggered in the period 2014-2016.4 The deal value achieved in the period 2014-2016 comprises about 40 percent of the total deal value over the last two decades.5 Although the number of deals dropped in 2016, the deal value was the highest in comparison to the previous years. This seems mainly due to higher-value deals by traditional non-3D printing companies, as they entered the 3D printing space by acquiring other 3D printing companies. Overall, this increased investment by companies in the last couple of years appears to indicate the rising awareness and adoption of 3D printing among companies, as 3D printing moves from prototyping to end-part production in a variety of industries applications.

    Figure 1: AM M&A Deals and Deal Value (1998-2016)


    Source: Mergermarket; see sidebar for the methodology.

  2. The US is expected to continue dominating the M&A space over the next few years 

    With AM’s increasing mainstream applications across industries, the US has been consistently dominating the AM M&A landscape, investing 88 percent of the total worldwide AM deal value of $5 billion in the past 20 years, as shown in figure 2.6In addition, the US has also had the highest deal value in target companies in the AM M&A space. US acquirer companies invested about 60 percent of their overall M&A investment in acquiring US-based 3D printing companies.7 The remaining 40 percent was invested by US acquirer companies in countries within Europe and Asia such as the UK, France, Japan, etc., where investment is seen to be increasing in the last few years. What best practices can be adopted by the US from these regions is yet to be seen.

    Figure 2: Target Company Geographies (1998-2016)


    Source: Mergermarket; see sidebar for the methodology.

  3. on-3D printing companies increasing investment in the 3D printing space

    The 3D printing industry continues to grow, as non-3D printing companies continue to acquire other companies throughout the value chain, including established players as well as startups producing new technologies to material manufacturers, hardware and software developers, and 3D printing service providers. This can enable them to include all the stages within a single enterprise, from 3D scanning to imaging to 3D printing. This suggests that companies are looking beyond just the printer itself toward owning capabilities across the full end-to-end AM solution.However, since 2015, traditionally non-3D printing companies such as General Electric and HP are also entering in the 3D printing space with large value acquisitions. General Electric entered the metals additive manufacturing space by acquiring two European-based metal additive manufacturing system companies in 2016.8 Additionally, HP also acquired David Vision Systems in July 2016, enabling the company to provide an end-to-end 3D ecosystem to its customers.9Traditionally non-3D printing companies such as BMW are providing venture funding to US-based metal 3D printing companies to accelerate 3D printing of metal parts, another high-growth application.10

Conclusion:

The increasing number of deals and consolidation in the last two decades appears to be leading to the development of newer capabilities within the AM value chain. M&A activity is concentrated in the US, but seems to be increasing in other parts of the globe. Many traditionally non-3D printing companies could be realizing the importance of investment in AM technology. All these factors combined point towards high optimism within the 3D printing industry in the future.

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https://dupress.deloitte.com/dup-us-en/focus/3d-opportunity.html.

Methodology

We used the Mergermarket database to retrieve M&A deals for the period 1998 till 2016 end and included only completed deals. Note that there are few acquisitions for which deal value was undisclosed. The following keywords were used to retrieve deals related to additive manufacturing.

“3D model, 3D printer, 3D printing, 3D scanning, Additive manufacturing, Binder jetting, Bio-printing, Computer-aided design, Continuous liquid interface production, Digital manufacturing, Direct manufacturing, Direct metal laser sintering, Direct printing, Electron beam melting, Generative production, Hybrid manufacturing, Laser sintering, Rapid prototype, Rapid prototyping, Selective laser melting, Selective Laser sintering, Sheet lamination, Solid imaging, Stereo lithography, Three dimensional model, Three dimensional object, Three dimensional printer, Three dimensional printing”.

After manual review and data cleaning, we finally arrived at 102 deals that served as our final data set. We then analyzed the deals and tagged them based on deal value per year, the number of deals per year, number of deals per region, value of deals per region, and the number of deals per company. Although not exhaustive, this analysis should provide key highlights of the M&A trends within additive manufacturing over the last two decades.

For further reading on trends and developments in the 3D printing space, we encourage you to check out Deloitte’s research on 3D opportunity for business capabilities and 3D opportunity for production.


1Rumki Majumdar, “Matching strengths: A new wave of corporate alliances may be on the horizon, Deloitte University Press, June 21, 2017, https://dupress.deloitte.com/dup-us-en/economy/behind-the-numbers/new-wave-of-corporate-alliances-mergers-acquisitions.html
2Capstone Partners, “Additive Manufacturing & Rapid Prototyping, Q3, 2015”, Page 5, http://www.capstonellc.com/sites/default/files/Capstone%20AMRP%20Report_Q3%202015.pdf
3Mergermarket Database
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8GE Additive, “GE Agrees to Purchase Controlling Shares of Arcam AB”, November 15, 2016, http://www.geadditive.com/press-releases/ge-agrees-to-purchase-controlling-shares-arcam-ab; GE acquired Arcam and Concept Laser on November 15, 2016
9HP Newsroom, “HP accelerates leadership in next generation computing, including Sprout by HP, with 3D acquisition”, June 30, 2016, https://newsblog.ext.hp.com/t5/HP-newsroom-blog/HP-accelerates-leadership-in-next-generation-computing-including/ba-p/454; HP acquired Germany-based David Vision Systems GmbH and David 3D Solutions in July, 2016
10Jaclyn Trop, “BMW, Google, And Lowe’s Invest In Boston-Based Metal 3D Printing Startup”, Feb 6, 2017, https://www.forbes.com/sites/jaclyntrop/2017/02/06/bmw-google-and-lowes-invest-in-boston-based-metal-3d-printing-startup/#593571067a3d

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