Contact: Scott Denne
Teradyne has announced a pair of deals at elevated valuations as developments in the Internet of Things (IoT) and artificial intelligence (AI) stoke the staid market for industrial automation technologies. The semiconductor testing vendor brought two new additions to its burgeoning robotics business: Mobile Industrial Robots (MiR) and Energid. Both fetched above-market valuations – valuations that are justified by a surge in deployments of automation tech.
Teradyne paid $148m, or 12.3x trailing revenue, for MiR and $25m, or 4.2x forward revenue, for Energid. Both transactions also include earnouts that would roughly double the ultimate price (we don’t include those in calculating the multiples). Those prices are well above the median valuation for players in the industrial automation segment. According to
451 Research’s M&A KnowledgeBase, the median multiple for targets in that space have hovered between 2.2-2.4x trailing revenue in each of the past four years.
The deals that have come in well above that mark often have an IoT or AI angle. Today’s acquisitions align with that trend – MiR makes robots that deliver parts and supplies around a factory and Energid develops motion-control software. Other industrial automation transactions that went off at high multiples include Teradyne’s 2015 purchase of Universal Robots (at 7.5x) and PTC’s pickup of Kepware (5x), a provider of software that enables legacy industrial equipment to link to IoT networks.
Those valuations – rare for the industrial automation sector – come as manufacturing facilities, warehouses and the like are increasing their budgets for automation projects. According to 451 Research’s Voice of the Enterprise: Internet of Things, Budgets and Outlook 2017 report, 39% of respondents told us their organization had deployed IoT projects for the management and automation of buildings, factories and warehouses, up from just 26% in the middle of 2016.
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