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Strong, steady aftermarket growth adds to increased M&A activity in 2016; more to come in 2017

Friday, May 12, 2017 - 07:00
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The strength and vitality of the U.S. automotive aftermarket contributed to another year of increased merger and acquisition (M&A) activity in 2016 and the trend will continue through 2017, according to two new analysis reports released by the Automotive Aftermarket Suppliers Association (AASA), the light vehicle aftermarket division of the Motor & Equipment Manufacturers Association (MEMA).

“AASA is a strong advocate of the vibrancy of the aftermarket and the significant contributions to the U.S. economy by vehicle parts manufacturers, especially in providing manufacturing jobs for our nation,” said Bill Long, AASA president and chief operating officer. “These two reports produced for AASA by BB&T Capital Markets and Jefferies LLC, provide important insights into the key drivers of our industry and the prospects for continued investment and growth.”

The Jefferies report reviews last year’s activity while the BB&T report describes trends likely to influence M&A activity in the coming years. Together, they provide a comprehensive look at M&A performance indicators and growth drivers.

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“2016 Automotive Aftermarket Investment Report” by Jefferies notes that 2016 was another strong year for M&A volume, with more than 130 substantial transactions occurring in North America. “We attribute aftermarket M&A activity to the strength of key industry drivers (increasing miles driven, growing car parc and an aging fleet); an improving and stable economy; favorable leverage levels and interest rates; and active financial and strategic partners,” said Jonathan Carey, managing director of Jefferies. The report also spotlights the quick lube market with an analysis of two strategic acquisitions by Driven Brands.

M&A transactions will continue to play an increasingly important role in the transformation of the aftermarket, according to BB&T’s forecast in “2017 Aftermarket M&A Outlook.” “Our analysis indicates that the aftermarket provides investors with above market returns for below market risk, and deals have the power to change the market, alter the customer base, and challenge companies’ competitive positions,” said Joe Sparacino, managing director, BB&T. The report also includes an analysis of Icahn Enterprises, “A Case Study in Aftermarket Consolidation and Supply Chain Integration.”

The M&A reports from Jefferies and BB&T are available to free to AASA members at the association’s website, www.aftermarketsuppliers.org. For more information about AASA’s industry analysis, contact Philip Atkins, director of strategic research and planning, patkins@aasa.mema.org.


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