Trending Industries: Healthcare, Industrial Machinery and Distributors

By Cody Boyte

  • As a CEO running your business, it’s nice to know how the broader economy is doing and understand which industries are most interesting for investors. One way to get a better understanding is to look at the Axial network to see which industries are relatively hot, which are slowing, and which are holding steady. As we pulled the data, the main metric we used to compare industries was ‘pursuits,’ which indicate interest from investors towards particular businesses.

    For the data we’re looking at this month, we’re comparing January 2014 to January 2013 to see what’s changed in the last year. The changes have been interesting, especially in the shift from an interest in hard goods to more interest in services businesses.

    Healthcare and Services Up Across the Board

    Last year there was still a lot of concern about the Affordable Care Act. Much of the regulation wasn’t due to be enforced until 2014 and there were still concerns about how each state would react to the recent Supreme Court ruling as it related to Medicare spending.  Most of the talk seems to have settled and while Healthcare Facilities are still unpopular, with only 3 investors interested in each company coming to market, there is a significant uptick in interest in health care related companies. Both Healthcare Supplies and Healthcare Equipment lead all industries with the most total investor interest – totaling 205 and 175 interested investors respectively. Healthcare Services is the 7th most popular industry with 111 investors pursuing businesses for investment.

    Along with health care, investors seem to be very interested in services businesses this year. Of the top 25 most popular industries, 14 industries are services. Last year, 14 of the top 25 were products or heavy industry businesses. It will be interesting to see if the trend continues, since service businesses tend to be more fluid as economies grow or shrink.

    Industrial Machinery, Oil & Gas, and Construction Steady

    Three industries in almost the exact same spot this year as last year are Industrial Machinery & Equipment, Oil & Gas Equipment & Services, and Construction & Engineering. As the Bakkan oil region has been built out over the last year or so, many oil services companies are finding their profitability growing tremendously. Also driving the boom was solid construction growth in the second half of last year, though it may have slowed this month.

    Companies in each industry seem to be coming to market at almost the exact proportion to satisfy investor interest. While the three industries were 1, 2 and 3 respectively in terms of total number of deals brought to market, they were all seeing nearly 5 investors interested for each company brought to market. We expect interest to stay steady or rise this year – when we compared January 2014 to December 2013 we noticed a significant uptick in interest for both Industrial Machinery and O&G while Construction was up slightly.

    Distributors, Facilities Services and Automotive Down

    The single most popular industry last year was Trading Companies & Distributors. In January 2014, the industry wasn’t even in the top 25. While other specialized distribution businesses, specifically Health Care Distributors, Technology Distributors and Food Distributors were represented, the general category of non-specific distribution has dropped significantly. Technology Distributors, for example, have seen almost the same number of deals come to market but have received half as much interest this year.

    Environmental & Facilities Services businesses are also seeing a significant decrease in investor interest. The 5th most popular industry by investor interest last year is now number 25. While the number of deals coming to market has dropped roughly half as much, the average investors per deal is down by 68%. Automotive companies have seen a similar precipitous decline. Last year 32 deals came to market in January and averaged roughly 6 investors per deal. This year 18 deals came to market and averaged just over 2 investors per deal.

    While things change month to month, it’s always interesting to look at current investor interest and deal flow. To get more information about deals, investor interest and deeper examinations of industries, read our industry tear sheets.

About the Author

  • NAME: Cody Boyte

Cody is a contributing writer for Axial Forum