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M&A Trends and Opportunities in Industry 4.0 and EdTech: Deals, Benefits, and Future Outlook
Vlad Zghurskyi
19.12.2024
4 Min Read
The Fourth Industrial Revolution Industry 4.0 and EdTech sectors are experiencing transformations, sparking interest among investors. From a manufacturing renaissance to education technology breakthroughs, the stage is set for a surge in M&A.
The M&A and business landscape is changing because of gaining ground in new sectors. The possibilities are huge. Both Industry 4.0 and EdTech are multiplying right now.
Let’s explore the trends fueling this activity and the opportunities for future growth.
Industry 4.0: A Manufacturing Resurgence
So, why Industry 4.0? In 2024, companies prioritize acquisitions that allow them to automate processes and leverage AI for operational efficiency. This includes investments in software that enhances data connectivity and analytics capabilities.
M&A activity is also being driven by sustainability goals, with firms looking to acquire technologies that support energy transition efforts. This includes renewable energy technologies and solutions that help organizations meet net-zero targets.
Manufacturers and industrial companies are at the point of renewed vitality. Several factors are contributing to this phase:
- Reshoring Initiatives
With global supply chain disruptions and a push for domestic production, reshoring has gained momentum. This trend is supported by legislative incentives encouraging companies to bring manufacturing back home.
- Macroeconomic Indicators
March 2024 saw the U.S. Purchasing Managers Index (PMI) move into expansion territory for the first time in 16 months. Survey respondents reported strong demand, growth potential, and stable commodity prices — signs of a healthier economic landscape.
- Technological Integration
Industry 4.0 technologies, such as automation, IoT, and AI, are enabling companies to streamline operations, reduce costs, and improve product quality.
- Legacy Software Upgrades
On-premise, monolithic software is fading fast. While some large or specialized organizations still rely on legacy systems, most manufacturers and industrial companies are moving to flexible, scalable SaaS solutions. Upgrading is a top priority, driving mergers and acquisitions across the sector.
- Data and Connectivity
Industries are now more data-driven than ever, enabling faster, smarter decisions through real-time insights. For industrial companies, once limited by physical operations, connected devices, sensors, and SaaS platforms now optimize performance, reduce bottlenecks, and improve maintenance. This integration unlocks new efficiencies and business intelligence.
Source: MarketResearchFuture
EdTech: A New M&A Frontier
Educational technology businesses and startups make their way among the most promising sectors for M&A activity. Just look at the numbers: between Q1 2020 and Q3 2024, EdTech investments reached $82 billion across 2,148 deals, averaging $38 million per deal. The peak came in Q2 2021, with $15 billion invested across 147 deals, fueled by surging demand for EdTech solutions during the COVID-19 pandemic. The global shift to remote and hybrid education models during this time drove record-breaking investor interest and deal activity.
Source: pitchbook.com
By Q3 2024, EdTech deal activity stabilized with over 80 deals completed during the quarter. This rebound reflects renewed investor confidence in the sector’s long-term growth potential and ongoing demand for scalable, profitable education technologies.
Source: rlhulett.com
There was a shift towards smaller-sized deals in 1H 2024, specifically in the middle market ($50 – $500 MM), which increased to 22.5% from 17.4% in the prior year:
Source: rlhulett.com
What Industry Trends Push M&A Deals in EdTech?
Of the 170 Education & Training deals in Q2, Education Training & Services (B2C) dominated with 71 transactions, making it the most active subsector. EdTech followed closely with 50 deals, while Education & Training Services (B2B) completed 49 transactions.
The thriving U.S. economy is propelling the online education market. As job competition intensifies, professionals are turning to online education to upskill affordably and conveniently. With projected revenue growth from $87.5 billion in 2024 to $144.3 billion by 2029 (CAGR: 10.52%), the sector is poised for sustained expansion.
Workplace mental health training has become a key focus as burnout and stress levels rise. 90% of employees worry about burnout and over 30% report high levels of stress and anxiety. Addressing these issues not only improves personal well-being but also enhances workplace productivity.
EdTech companies are especially appealing because they are tough to break into (thanks to hefty upfront development costs) but offer solid ongoing returns with SaaS models. Plus, customers often stick around for the long haul — learning takes time.
Then there’s the universal pull of education. It’s a global need, making it easier for businesses to expand into new markets and grow an international customer base.
Combine these strengths with falling interest rates, and it’s clear why many investors who held off are now jumping in, ready to take advantage of better borrowing conditions.
Future Outlook
The outlook for M&A activity in both Industry 4.0 and EdTech remains positive as companies navigate the challenges posed by regulatory changes and economic fluctuations.
As companies seek growth beyond domestic markets, cross-border M&A is anticipated to rise, particularly in the technology sector. Meanwhile, private equity firms are expected to continue playing a significant role in driving deal activity, particularly as they recognize the potential of technology-driven companies within these sectors.
Of course, you should expect the regulatory landscape to impact deal timelines and strategies, necessitating careful navigation by companies looking to engage in M&A activities.
Conclusion
As we look ahead, it’s clear that both Industry 4.0 and EdTech are poised for significant activity and innovation. This makes them prime sectors for M&A opportunities. We recommend keeping a close watch on both segments — they are evolving rapidly and present numerous opportunities for growth, innovation, and strategic partnerships.
Mergewave Capital has deep expertise and a strong understanding of both markets. We provide full support to those looking to buy companies in this industry, as well as those looking to sell. Our experience and insights ensure smooth and successful deals for everyone involved.
Whether you’re an investor or a company representative, you can contact us to explore the Industry 4.0 and EdTech options that will empower your business.
EdTech M&A
Industry 4.0
M&A Trends
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