A Once-in-a-Century Opportunity for Industrial M&A

New tariffs on imported goods and materials are reshaping how companies operate and how they’re valued. As a result, U.S.-based manufacturers are finding themselves in a position of renewed strength. For owners considering an exit, this changing landscape presents a unique and timely opportunity. 

While market shifts can bring uncertainty, they can also uncover hidden value, or as STS refers to it, a “Rembrandt in the Attic.” For many U.S. manufacturers, these tariff changes may be the key to unlocking a more rewarding and lucrative sale. 

Table of Contents

How Tariffs Are Changing the Picture

Increased Foreign Investment in U.S. Manufacturing

Valuation Shifts in the Post-Tariff Era

The “Rembrandt” for Many U.S. Manufacturers is their Domestic Presence 

The Role of Expert Advisory in Strategic M&A

Conclusion 

How tariffs are changing the picture 

Recent U.S. trade policies have introduced substantial tariffs on imports from key regions. While this has added complexity to supply chains, it has also increased the value of domestic production. This includes more than just improving operating and EBITDA margins. 

Manufacturers that have invested in U.S.-based operations are now more attractive to buyers, especially international strategics looking for local capabilities and access to the American market. That interest is reflected in increased M&A activity and, in many cases, higher valuation multiples. 

Increased foreign investment in U.S. Manufacturing

Global businesses are actively seeking to acquire U.S. manufacturing assets to mitigate the impact of tariffs and strengthen their foothold in the American market. This trend spans various industries, including automotive, electronics, industrial, and consumer goods. Reports indicate that companies are exploring U.S. expansion to lessen the fallout from potential tariffs, indicating a strategic shift toward domestic production. 

International companies, particularly in Europe and Asia, are increasingly looking to the U.S. for strategic acquisitions, driven by: 

• The desire for local manufacturing capabilities amid rising tariffs.

• Access to the North American customer base.

• Advanced technologies developed by U.S. manufacturers.

• Strong existing distribution networks.

While cross-border M&A remains complex, navigating regulatory frameworks, integrating teams, and aligning cultures all require thoughtful planning. But for the right buyer, acquiring a U.S. business is often the fastest and smartest way to gain a competitive edge in a growing market. 

Valuation shifts in the post-tariff era

Tariffs have led to notable shifts in how U.S. manufacturing companies are valued. Previously, valuations were influenced by global supply chain efficiencies and lower production costs abroad. Now, the increased cost of imports has boosted the appeal of domestic operations, especially for international buyers seeking certainty. 

The market is responding accordingly: 

• Private U.S. manufacturers with strong domestic operations are trading at 8x to 12x EBITDA, particularly in automation-heavy or infrastructure-related sectors (FirstSage). 

• Companies heavily reliant on overseas labor or global supply chains are seeing compressed multiples due to higher perceived risk. 

• Foreign acquirers, especially in high-tech, automotive, and defense, are targeting U.S. companies to offset tariff exposure and secure market access. 

As tariffs realign the global manufacturing landscape, they’re not just inflating the value of U.S.-based operations, they’re also creating an unusually dynamic environment for both sellers and buyers. 

Key drivers of growth

Several trends are amplifying these shifts in valuation: 

1. Reshoring Momentum: Since 2022, 22% of U.S. manufacturers have moved operations back to domestic soil, committing $220 billion in capital expenditures through 2026 (McKinsey). This trend has led to a surge in domestic asset acquisitions, particularly among mid-market manufacturers such as steel fabricators and injection molders. 
2. Automation Investments: Heavy investments in robotics and AI-driven production are significantly reducing labor costs while enhancing efficiency (BCG). These technology-driven industrials are commanding higher valuations, making them attractive targets for private equity and strategic buyers. 
3. Government Incentives: Policies such as the Infrastructure Investment & Jobs Act (IIJA) and the Science & CHIPS Act have allocated billions toward infrastructure and semiconductor manufacturing, increasing demand for domestic production and creating M&A opportunities. 
4. Tax Environment: Lower corporate tax rates and favorable capital gains tax policies provide businesses with greater cash reserves to pursue acquisitions, strengthen supply chains, and accelerate growth through inorganic strategies. 

The “Rembrandt” for many U.S. manufacturers is their domestic presence

As the spotlight shifts toward domestic capabilities, many manufacturers are discovering they’re in a far stronger position than expected. This is often where we uncover hidden value, strategically valuable attributes that when positioned effectively to buyers can significantly elevate deal outcomes. 

Opportunities for sellers and buyers in a shifting market

Whether you’re planning an exit or expansion, today’s climate offers rare advantages – ones that may not last. 

For sellers: Manufacturers with modernized operations, diverse customer bases, and a strong domestic footprint are reaping the rewards. Tariff protections and policy incentives are enhancing their appeal to international acquirers and private equity alike. 

Why sellers are seeing stronger outcomes: 

• Higher Valuations: Domestic manufacturers with automation and efficiency at their core are commanding 8x–12x EBITDA multiples, sometimes more in key sectors. 

• Intensified Buyer Demand: International and strategic buyers are competing for U.S. assets, creating a favorable, seller-friendly deal environment. 

• Policy Tailwinds: Legislative incentives are enhancing long-term value, particularly in automation, infrastructure, and tech-forward manufacturing sectors. 

For buyers: International firms and PE groups view U.S. manufacturing as a growth engine. Whether they’re mitigating global risk or seeking long-term market access, acquiring a domestic player is proving to be a smart, future-ready move. 

What’s driving buyer interest: 

• Mid-Market Roll-Ups: PE firms are acquiring smaller manufacturers (trading at 6x – 8x EBITDA) to build scalable regional platforms. 

• High-Tech Industrials: Automation and AI-driven businesses are being acquired at premiums, often 10x–12x EBITDA. 

• Access to Incentives: Acquiring U.S. firms unlocks local tax benefits and government grants, boosting ROI on cross-border deals. 

The Role of Expert Advisory in Strategic M&A

Navigating this complex M&A environment requires expertise. A firm like STS Capital Partners helps uncover hidden value, position businesses for maximum attractiveness, and connect them to a global network of strategic buyers. 

Conclusion

“Given the current market dynamics, U.S. manufacturers contemplating an exit may find this an opportune moment. One that comes around only once in a century (literally). The heightened interest from foreign investors, coupled with favorable valuation adjustments, positions domestic manufacturers advantageously in negotiations.” – Michael Smith, STS Managing Director 

With extensive experience in manufacturing M&A and a global network of strategic buyers, STS Capital Partners is here to help you move from Success to Significance™, by Selling to Strategics™. For those ready to capitalize on the opportunities that the new tariffs present in the manufacturing sector, partnering with STS ensures access to a pool of international strategic buyers who will pay the maximum value for your business, ensuring you can achieve an Extraordinary Exit.