Industrial automation M&A: Finding value in uncertainty

The automation market is a massive industry with many subverticals — and it continues to be reshaped by mergers and acquisitions (M&A). In 2025, the landscape is evolving quickly amid ongoing uncertainty in global supply chains, workforce dynamics and technology disruption. Yet for many buyers and sellers, that uncertainty is opening up new windows of opportunity.

Mid-market deals are emerging as the dominant force in automation M&A activity, supported by lower interest rates, easing inflation and shifting policy priorities under the new U.S. administration. Financial sponsors and strategic buyers are leaning into this environment, seeking deals that offer scalability, recurring revenue and strategic positioning — even if market conditions remain fluid.

This moment also favors companies that have doubled down on innovation. Buyers are especially focused on firms integrating generative AI, predictive analytics and connected worker technologies into their solutions — technologies that enable greater agility, efficiency and decision-making clarity when conditions are less predictable.

To help define the current state of the industry, let’s explore the trends driving this momentum — from financial sponsor roll-ups and acqui-hiring strategies to tech-enabled value creation and the shifting dynamics of deal valuation in 2025.

Defining the automation market

First, it’s valuable to understand the different segments that define the automation market, as investors and buyers create different strategies based on the respective solutions. The automation sector includes:

• Control system integrators that design and implement sophisticated control systems for their clients, focusing on systems integration.
• Automation manufacturers that make or fabricate branded automation products or customized products.
• Software automation solution providers that develop proprietary solutions so clients can automate and monitor end-user systems, often involving SaaS and enterprise resource planning (ERP) systems.
• Automation distributors that offer a range of automation product lines, including robotics, sensors, vision systems and motion controls.

How inflation is impacting the automation M&A landscape

Investment bankers, business owners and buyers are closely monitoring the impacts of inflation on M&A industry trends. If the cost of products increases rapidly but a company isn’t passing through the costs, then it becomes more challenging to sell or raise capital for the business. In addition, declining financial performance due to inflation could create downward pressure on a company’s valuation.

With automation, the backlog can stretch out three, six or nine months. By the time a company receives materials — especially with supply chain delays and in a tumultuous tariff landscape — the product costs are often creeping up. Many automation solutions firms are educating their customers about supply chain issues and the impact of rising prices.

In addition, proactive firms are either baking potential price increases into proposals or successfully passing the cost increases through to clients. Automation firms that are successful in passing through price increases can retain optimal profitability and valuations, contributing to a positive tech M&A market update.

M&A trend: Generative AI and predictive analytics

In 2025, strategic buyers and financial sponsors are placing increasing value on firms that have embraced generative AI, predictive analytics and connected worker technologies. These innovations are not just buzzwords — they are proving to be critical differentiators in automation M&A.

Generative AI is helping automation companies design more adaptive and customized solutions, reducing engineering hours and accelerating time to market. It also opens the door to new service lines, such as autonomous system diagnostics or intelligent code generation, further enhancing value creation.

Meanwhile, predictive analytics enables firms to anticipate equipment failures, optimize maintenance cycles and improve supply chain planning. This level of data-driven insight is especially attractive to buyers seeking operational efficiency and scalability.

These technologies are driving increased interest from investors and pushing valuation multiples higher for firms that can demonstrate mature, scalable AI capabilities. For buyers, acquiring AI- and analytics-forward firms offers both a competitive edge and a faster route to digital transformation.

These technologies are also transforming go-to-market strategies.

Many automation firms are using predictive customer analytics to shift from reactive to proactive sales models.

Outside sales teams are being supplemented with AI-driven insights that anticipate both client needs and emerging wants. Inside sales departments, once seen as reactive, are now equipped to offer tailored solutions before a customer even identifies the need — converting relationships from transactional to indispensable. This evolution is not only accelerating sales velocity but also increasing customer stickiness and driving up valuations.

M&A trend: Financial sponsor roll-ups

M&A activity in the industrial automation space has accelerated over the past five years due to financial sponsors. These organizations make an initial (platform) investment and then complete add-on acquisitions to grow the platform, often targeting M&A software companies and pursuing enterprise software M&A and SaaS M&A activity.

Financial sponsors often include private equity groups, family offices and other institutional investors. As return-driven investment groups, they have a heightened focus on finding markets and companies where the risks are low and the rewards are high. The automation market “fits the bill,” which is why so many sponsors are either invested in the segment today or desperate to complete an acquisition in it.

And there are no signs of this financial sponsor “roll-up” momentum slowing or stopping, especially since consolidation still has plenty of runway and the automation sector is forecasted to grow. This trend is contributing to the overall increase in global M&A activity within the industrial automation sector.

M&A trend: Acquiring talent

Strategic buyers and financial sponsors have numerous avenues for M&A growth. However, a common bottleneck is finding talented management and employees to perform this highly skilled work. As it relates to M&A, companies are using acquisitions for talent acquisition and retention. This is affectionately referred to as an acqui-hire strategy.

Financial sponsors are frequently working with industry veterans to find investment opportunities and then adding professionals to the leadership team of the platform company. Automation companies are adding bench depth with strategic acquisitions, from CEO positions all the way down to the field technician level. For some firms, M&A is the best strategy to execute growth opportunities, operational improvements and inorganic growth strategies.

Q3 2025 transaction trends

Aggressive strategic buyers have proven they are willing to pay valuation multiples when growth and synergies can be achieved. Valuation multiples in the automation sector have continued to rise over the past five to seven years, driven by strategic growth initiatives and the increasing importance of enterprise software, artificial intelligence and data analytics.

In 2025, the spotlight is on firms that are embedding generative AI, predictive analytics and connected worker technologies into their automation solutions. These capabilities are driving stronger interest from investors by accelerating product development, enhancing operational efficiency and enabling more scalable service delivery. For example, generative AI is being used to streamline engineering workflows and generate adaptive control logic, while predictive analytics is helping firms better manage maintenance and resource planning.

Owners with these differentiators are seeing especially favorable outcomes in banker-led processes, where competitive dynamics continue to push valuations upward — particularly in M&A manufacturing deals that emphasize digital transformation and tech integration.

How Wipfli can help

Uncertainty creates opportunity — if you’re ready.

Wipfli helps mid-market automation firms navigate M&A with clarity and confidence. Whether you’re buying, selling or strategizing for growth, our advisors bring the insights, relationships and tech-forward strategies to move you forward. Talk with us about your next move