Industrials Sector
Hi All,
Incoming IB analyst set on recruiting for PE (targeting UMM/MF, location TBD). Currently interested in Industrials. I'm trying to learn more about Industrials investing (Accounting/Valuation Metrics, KPI's, etc.). Obviously very easy to find PDF after PDF on ARR, etc. but haven't had much luck finding Industrials-specific stuff. Also, trying to learn more about various Industrials groups (performance, culture, reputation, etc.). Also, looking for Industrials newsletters/articles. WSJ/Axios/etc. all have tech/healthcare newsletters, but haven't seen any for Industrials - any recommendations on this?
TL;DR:
Looking to learn more about Industrials PE (UMM/MF). Specifically, newsletters, accounting/valuation standards/metrics, and groups (reputation, performance, culture, etc.).
Appreciate any advice/input.
Work in IB
Summered/incoming in an M&A group. Know I'll get more exposure to Industrials space after working in IB, but with how early PE recruiting is, it's not relevant for recruiting.
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3rd year industrials analyst — Id look up articles on past KPS deals, there’s a few that go into their strategies for turning around a given manufacturing business and the dynamics in the space when they invested. You’ll observe market dynamics related to cyclicality (from both a credit and business perspective) and get a high-level view into the main levers / drivers in these businesses. Also interesting to see the buyer/auction dynamics at both entry and exit. Example here: https://www.kpsfund.com/docs/default-source/newsandpressreleases/buyout…
the other thing i’d do is look at non- large cap public companies like Manitowoc, Titan International, Carpenter Tech, Twin Disc, Park Ohio, Lincoln Electric, Terex, United Rentals — those companies are easier to conceptualize than say a global manufacturing behemoth like Parker Hannifin.
Some public co exercises that helped me: Read the “competition” parts of their 10ks and look up who they’re up against.
Think about each business model in terms of multiple. Why are distribution business trading at lower multiples than branded manufacturers? Why would Manitowoc trade at a higher multiple than Terex (or vice verse at a given point in time)? How do the multiples of Carpenter Tech, Titan kinda move in cycles?
this will help you prep for PE and understand industrials business models. As for good groups, you’ll get that pretty quickly as soon as you build a contact log for a sell side and a Pitchbook / Mergermarket account. Monomoy, KPS, Middleground, AIP, HIG, Gridiron have all had cool deals / great funds
I think that will help give some familiarity. From a modeling perspective, what’s great about the space is it’s mostly unit economics that are pretty transparent + overhead, so you can get a sense of the mechanics pretty quickly.
Any other industrial bankers feel free to supplement or correct any missteps. But that’s where I’d start. Good luck!
This is great. Thank you for the taking the time to thoroughly explain - much appreciated.
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