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74 SMT007 MAGAZINE I JANUARY 2021 One interesting aspect of the current mar- ket is that we are not seeing a lot of distressed deals given the troubled economic environ- ment. The PPP loans and other stimulus have certainly helped a lot of companies, and many manufacturers have been able to maintain their essential business status and stay open. We expect that more distressed deals will unfortunately come up unless the economy recovers quickly. By our count, the number of PCB compa- nies in North America continues to decline to approximately190 manufacturing companies and approximately 30 PCB distributors. Of the PCB companies, about 20 have over $25 mil- lion in revenue and over 100 have less than $5 million in revenue. There are probably 50 PCB shops with $2 million or less in revenue, the number of which is probably going to drop by 50% in 10 years. We expect that the larger, pri- vate equity-backed companies will continue to acquire the smaller companies, both in the PCB and EMS sectors. It is encouraging to see Sch- weitzer Engineering announce one new green- field PCB shop in Moscow, Idaho, but overall, the number of PCB shops will most likely drop significantly in the coming years. In the EMS industry, our count is about 700 companies in North America (note, this is companies, not the number of facilities, which would be greater). As more PE-backed com- panies make acquisitions and baby boomer owners retire, the number of companies will decrease (but the number of facilities may not change as much). The number of PCB shops that also do assemblies and/or PCB brokering will most likely increase, either through acqui- sitions or partnerships, as many customers prefer a one-stop option. In any case, 2021 will certainly be an interesting year. SMT007 Tom Kastner is the president of GP Ventures, an investment banking firm focused on sell-side and buy- side transactions in the tech and electronics industries. GP Ventures has offices in Chicago and Tokyo, with five people in total. To read past columns or to contact Kastner, click here. • Creation Technologies (Lyndsey Goldman) acquired Applied Technical Services (May 2020) • SigmaTron International (public company) merged with Wagz (June 2020) • Sparton Corporation EMS Division sold to One Equity Partners (June 2020) • Universal Electronics acquired by East West Manufacturing (Heritage Growth Partners) (September 2020) • M-Wave International acquired by SlingShot Assembly (October 2020) • EmeraldEMS (NewWater Capital) acquired Saline Lectronics (November 2020) and Veris Manufacturing (December 2020) Once again, private equity was behind many of the deals in 2020 and is expected to be a major player going forward. PE firms have gained interest in the PCB and PCBA sectors and they are sitting on a lot of "dry powder" (raised funds that need to be deployed). PE firms have stepped into the place of public companies to provide liquidity to many retir- ing owners. Many of the deals were completed by com- panies with less than $100 million in reve- nue. The one deal that was announced glob- ally with over $1 billion in revenue was the USI (Taiwan) and AsteelFlash (France) trans- action. Otherwise, the large, medium, and small-tier EMS and PCB companies were mostly quiet in 2020. The larger firms seem to be more interested in focusing on their core businesses rather than on growing through acquisitions. Many of the completed deals in 2020 were most likely in discussions before the effects of COVID-19 started to hit in March/April. There was certainly a lull in activity in the March to June period, but activity seemed to pick up in July once buyers and sellers began to feel more comfortable with the current conditions. Greater use of video/Zoom calls in commu- nications as well as video for due diligence has helped get deals done in 2020. Dealmak- ers will need to be flexible to complete deals going forward.