Boston, MA (June 19, 2020)—In late May, investment banking firm Capstone Headwaters unveiled an extensive analysis of the pro audio industry and its future with the release of its industry report, Sound Management is Sound Sense: Audio & Acoustics Mergers & Acquisitions Update 2020. Based on data from both before and during the COVID-19 pandemic, the report uses statistics and historical observations to paint a picture of an industry in relatively good economic shape despite current challenges.
The report notes that there was increased merger and acquisition (M&A) activity through 2019, driven by strategic technology acquisitions and private equity consolidation, with the sector demonstrating “strong growth and profitability in a large market with many players serving protected niches.” In Capstone Headwaters’ estimation, 2019 saw a 45% year-over-year increase in deal activity, whether by companies looking to acquire technologies or by private equity firms. In fact, 43% of those acquisitions were made by private equity, with 60% of those deals adding on to existing investments in the industry. Inadvertently highlighting both pro audio’s long history as a greenhouse for entrepreneurs, as well as the aging of some of the industry’s brands, the report found 63% of last year’s sellers were company founders, while corporations divesting made up only 20% of the deals.
While acknowledging that the industry is affected by the pandemic pause as much as any other, the report also notes that the underlying need for technologies to provide and manage sound will remain, and thus expects entities in the industry to continue using proven approaches, stating, “The Sound Management market has shown strong growth and is expected to continue at around 5% per year (pre-COVID-19) with a market size estimated at around $50 billion globally.”
Looking to the future, Capstone Headwaters expects companies to make further acquisitions with an eye towards netting the right technologies to help expand existing product lines and build up the potential for selling integrated systems of equipment. Perhaps unsurprisingly, there’s also an expectation for continued industry consolidation by private equity firms. Not everything is glowing within the report, however, as it also expects that the current economy will demand all companies to be more efficient and prune unpromising products or initiatives.
More stats and insights can be found in the report, downloadable at https://capstoneheadwaters.com/audio-acoustics-ma-update-2020