Industry Trends
Overall M&A transaction volume in the Industrials industry remained robust in Q3 2025. Capital
investment continues to surge, reflecting investor confidence and strategic consolidation within the sector.
Technological advancements, particularly in AI and automation, along with evolving U.S. regulatory and
antitrust policies, are driving growth in the industry, creating new investment and collaboration opportunities.
Additionally, private equity is likely to contribute to a rise in M&A activity, as firms have significant capital ready to be invested, especially as financing challenges begin to subside.
Market Dynamics
- The Aerospace & Defense sector continues to perform strongly with both the highest sub-sector overall valuation (20.8x EV/EBITDA) as well as the largest increase in YoY multiple appreciation (+13.7%). Sector performance is driven primarily by geopolitical tensions, rapid developments in AI related technologies, and expansion of the space sector.
- Industrial companies, especially manufacturers, are investing heavily in AI, advanced analytics, and integrated systems as end-to-end margin management becomes critical for competition. Contract Manufacturing index value performance increased by 9.8% YoY.
- The Distribution sector continues recovering from trade uncertainties and tariff impacts, with stable multiple growth since the beginning the year (+12.3% YTD).
- Specialty Contracting index value increased by 14.6% in Q3, the largest quarterly increase between the sectors. Construction investment stemming from the bipartisan Infrastructure Investment and Jobs Act (IIJA) is expected to continue driving growth in the Specialty Contracting sector through 2026.
Sources: Capital IQ as of 09/30/2025. Reuters, Barclays, Simon-Kucher, PwC, McKinsey & Company, Deloitte, BLDR
Learn More
Reach out to Dinan Capital Advisors Managing Director Tom Gerlacher for more report insights.