Advanced Materials and Protective Coatings Transactions and Valuations

Between Q1 2020 and Q3 2024, approximately $16 billion was invested into the advanced materials and protective coatings sector through M&A transactions by global firms.

The advanced materials and protective coatings sector plays a critical role across a range of industries, offering solutions that improve the durability, performance, and sustainability of essential materials. This sector includes specialized coatings and materials engineered to increase resistance to extreme environments, wear, and corrosion. Industries like aerospace, automotive, and industrial manufacturing heavily rely on these innovations to ensure optimal performance, longevity, and compliance with increasingly stringent regulations. The demand for advanced coatings and materials is crucial in industries where performance and safety are paramount.

As environmental regulations tighten and performance standards rise, the market for advanced materials and protective coatings continues to grow. Companies are investing in innovative technologies like surface engineering and high-performance coatings to stay competitive. This sector’s importance is also highlighted by global trends in sustainability and resource efficiency, which further drive demand for advanced solutions that can reduce material waste, improve energy efficiency, and extend the lifecycle of critical components like offshore wind turbine blades and aerospace engine parts.

• The valuation multiples for advanced materials and protective coatings are derived from a sample set of both private and public companies, analyzing M&A transactions that occurred between Q1 2020 and Q3 2024.
• This sample set shows that enterprise value to revenue multiples range from 1x to 4x, with a mean of 2x and a median of 2x. These multiples reflect the revenue growth potential of companies within this sector, driven by advancements in protective coatings technologies.
• Average enterprise value to EBITDA multiples range from 8x to 21x, with a mean of 13x and a median of 11x. The high EBITDA multiples indicate a market where acquirers are willing to pay a premium for companies with strong earnings and substantial future growth potential. Investors consider these businesses strategic acquisitions, with the ability to scale their operations and increase profitability over time.

• From Q1 2020 to Q3 2024, more than $16 billion was invested across 234 M&A transactions in the advanced materials and protective coatings sector, with an average deal size of around $70 million. This level of investment highlights the sector’s role in providing essential materials for industries requiring durability and compliance with regulatory standards.
• Q4 2021 saw the highest capital deployment at $5 billion, possibly due to increased demand for protective technologies amid global supply chain pressures and evolving regulations. Q1 2021 recorded the highest number of deals at 22, signaling early interest in consolidation within the sector.
• While capital investment fluctuated, the quarterly average of $70 million suggests consistent interest in M&A within advanced materials and protective coatings. This trend reflects a steady focus on materials that support durability and sustainability requirements across multiple industries.
• The acquisition of Allnex by PTT Global Chemical for $4 billion on December 29, 2021, was the largest transaction during this period. This deal illustrates the value placed on advanced coating technologies that serve critical sectors such as automotive, aerospace, and industrial manufacturing.

• The United States leads both in capital invested ($6 billion) and deal count (102 deals) in advanced materials and protective coatings M&A transactions from Q1 2020 to Q3 2024.
• Germany deployed 33% of the total capital invested ($4.8 billion) but only 6% of the deal count (13 deals), suggesting larger individual deals compared to other countries.
• The United Kingdom consistently contributes to both metrics, with 13% of the capital invested ($9 billion) and 9% of the deal count (22 deals).
• Other countries, such as Finland, Australia, Italy, and Canada, account for smaller shares, yet their combined deal participation reflects global interest in M&A transactions in this sector.
• The majority of the capital is concentrated among the United States, Germany, and the UK, which together represent 87% of the total capital invested in the sector.

• Merger and acquisition transactions accounted for the largest share of capital invested, with $11 billion deployed across 141 deals. This high level of activity highlights ongoing consolidation in the advanced materials and protective coatings sector as companies seek to strengthen their market positions, expand technological capabilities, and leverage synergies to meet growing demand across industries like aerospace, automotive, and industrial manufacturing.
• Buyout/leveraged transactions represented the second-largest deal count, with 91 transactions totaling $3 billion in capital invested. This trend indicates a strong interest from private equity firms looking to acquire and restructure companies within the sector, enhancing operational efficiencies and long-term profitability.
• Corporate divestitures saw $3 billion in capital across 16 deals, signaling strategic decisions by larger corporations to divest non-core assets or business segments, allowing them to focus on their primary offerings. These transactions often involve the sale of specific advanced materials or coating technologies that may better align with the buyer’s core business strategy.
• Secondary buyouts involved $2 billion over 10 deals, typically where one private equity firm sells its stake in a company to another private equity firm. This form of transaction reflects ongoing investor confidence in the sector’s growth potential and the appeal of mature assets that can be further developed under new ownership.

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The advanced materials and protective coatings sector continues to demonstrate strong potential for growth and consolidation, with high-value transactions and consistent capital investment underscoring its strategic importance. The period from Q1 2020 to Q3 2024 witnessed significant activity, with the United States, Germany, and the United Kingdom dominating in terms of capital deployed and deal count. The focus on innovative materials and specialized coatings is expected to remain a key driver of M&A in the sector, as companies look to enhance performance, sustainability, and technological capabilities. Investors and acquirers can leverage the insights from this report to identify opportunities and navigate the competitive landscape of advanced materials M&A transactions.

Source: Markets and Markets, Precedence Research, Market Research Future, Pitchbook Data.