Industrial Market: M&A on the rise in the Sector

The term Industrial Markets generally covers industries such as Manufacturing, Capital Goods, Infrastructure, Steel, Chemical, and Industrial Equipment. In Brazil, this sector is a significant pillar of the economy, accounting for about 20-25% of industrial GDP, depending on the year and methodology. In 2024, for example, Industry as a whole (including Construction) represented 24.7% of GDP, according to the IBGE.

IBGE data indicate that Industrial Production in Brazil grew 1.6% in December 2024 compared to the same period in 2023, but fell 0.3% from month to month. This shows an annual recovery, but with signs of recent volatility, possibly due to macroeconomic uncertainties, such as inflation and interest rates.

Last week, KPMG published an analysis highlighting the robust performance of the mergers and acquisitions (M&A) market in the Industrial Markets in 2024. According to the report, released in March 2025, 41 transactions were registered over the past year, an increase of 32% compared to 31 transactions in 2023. Of this total, 19 were domestic, carried out in Brazil, evidencing a significant recovery in the local market.

This growth reflects a scenario of renewed confidence, driven by factors such as economic stabilization, demand for consolidation, and the search for operational efficiency in the industrial sector.

• Domestic Growth as a Main Engine: The fact that almost half of the transactions took place in Brazil suggests that local companies are seeking to strengthen their positions in the domestic market. This may reflect a consolidation strategy to gain scale or a response to competitive pressures.

• Post-Deceleration Recovery: The 32% increase compared to 2023 indicates a recovery after more timid years, possibly influenced by an improvement in macroeconomic conditions, such as a reduction in interest rates or greater predictability in the exchange rate. This suggests that 2025 could be an even warmer year, as companies that delayed M&A plans take action again.

• Industrial Sector in Transformation: The Industrial sector covers areas that are undergoing significant changes, such as digitalization (Industry 4.0) and the transition to more sustainable models. M&A transactions may be being driven by companies seeking to acquire specific technologies or capabilities to remain competitive.

What does this increase in M&A volume signal for 2025?

• Expected Growth: Brazil's real GDP is expected to grow between 2.0 and 2.2% in 2025 (World Bank and FOCUS Report), with the Industrial Sector following this trend, driven by exports and domestic consumption. The Deloitte report (March 2025) predicts that domestic demand will continue to support the sector, but inflation and exchange rates may be challenges.

• Exports: Despite a 0.8% drop in goods exports in 2024 (Deloitte), a recovery is expected in 2025, especially in manufacturing (+2.5% in 2024), due to the lower probability of tariff barriers from the US to Brazil.

• Sustainability: The industrial policy “New Industry Brazil” (launched in 2024) allocates R$ 300 billion by 2026 for innovation and sustainability, directly impacting the Industrial Markets with incentives for green technologies.

At FC Partners, we already have a history of success advising clients in this sector, such as Forging steel, Cabtec, SVA Tech and Itabolt in strategic transactions in this sector, helping them navigate challenges and capture value at key moments.

Our focus is always to deeply understand the needs of our clients and deliver tailor-made solutions in a market that continues to evolve.

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