The Flow Control industry is outperforming the broader market in the wake of the global recession, but the short-term business forecast is still unclear, according to the latest Industry In-Sight Flow Control Quarterly Update from Jordan, Knauff & Company.
Jordan, Knauff & Company, a provider of merger and acquisition services to Flow Control businesses, asserts that, overall, business in 2011 for the Flow Control industry has been better than in 2010.
“Business performance is relatively strong and has rebounded from the depths of the recession, but visibility is limited,” says the report.
This limited visibility is due to the inability to accurately forecast a budget in the current environment given difficult economic variables such as high unemployment, fragility in the European economy, and the weak housing market, etc., the report concludes.
Industry In-Sight looked at the Purchasing Managers Index (PMI), as one gauge of business confidence. The index, compiled by the Institute for Supply Management, is highly focused on the manufacturing sector and measures five categories—new orders, production, employment, supplier deliveries, and inventories— in terms of better, worse or same.
Industry In-Sight points out the PMI has rated above 50, a number that generally indicates expansion, during the last 12 months. Although optimistic, the index number has decreased monthly since a peak in February 2011 from 61.4 to 55.3. Industry In-Sight suggests this drop signals a cautious outlook among business owners and could be cause for concern.
Regarding merger and acquisition activity, the report says many business owners are not confident in moving ahead to pursue a partial or full sale of their business right now, but many others are actively seeking acquisition targets because organic growth has been hard to achieve.
“Acquirers are hungry for quality assets and have available debt and capital,” the report concludes. “Strategic acquirers are aggressive and private equity has a massive overhang of capital for investment.”
To request a copy of the latest Industry In-Sight Flow Control Quarterly Update, click here.