IoT M&A Report:
Strong M&A momentum continues in IIoT

Q1 2025 – M&A trends, valuation multiples and transactions in the IoT sector

Personal Note: IIoT growth drives innovation and M&A activity

The Internet of Things (IoT) market is set to grow at a CAGR* of 10%, reaching $1,560 bn by 2029, reflecting its expanding role across industries. Within this broader trend, the Industrial Internet of Things (IIoT) has emerged as a key driver of industrial digitalization with a CAGR of 14% being the fastest-growing IoT sub-segment. By connecting machines, sensors and systems, companies leverage real-time data to optimize processes and improve decision-making.

Arno Pätzold

Managing Partner ARTHOS
Expert in Sensors, Automation, Semiconductor & Photonics

arno.paetzold@arthos.de

Steadily growth continues for all IoT indexes, except the Edge Computing & Connectivity Index

However, rising connectivity leads to new risks. According to the Eclipse Foundation, connectivity (48%) has overtaken security (35%) as the leading concern for IoT and edge developers in 2024. To address this, the European Telecommunications Standards Institute (ETSI) launched the Technical Committee on Data Solutions. This initiative promotes new standards to enhance data security and privacy in sectors like IoT, in line with the EU Data Governance Act. New standards will give rise to new products and companies fueling M&A in the mid-term.

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Grafik über: Mit Ausnahme des Edge-Computing- und Konnektivitätsindexes verzeichnen alle IoT-Indizes ein stetiges Wachstum

Pitchbook (as of 25 March, 2025)

2024/25 Large M&A Transactions: Fewer mega deals, but notable SPAC acquisitions

In 2024, IoT M&A activity remained strong, highlighting the industry’s growth potential. While mega-deals in IoT (transactions exceeding €1.0 bn) have declined compared to 2023, the total number of transactions remained high, especially in connectivity and IIoT. Companies are pursuing strategic acquisitions to expand portfolios and enhance technological expertise. This surge in M&A activity will accelerate market development, with companies that strengthen innovation through acquisitions leading the digital future of the industry.
Along with the importance of IIoT Technologies for their own business, companies in industry sectors like energy, healthcare and automotive started to deal with IIoT. Going forward, I expect more small and medium-sized transactions to take place, filling the know-how gaps of the acquirers by addressing their business-critical applications. The M&A market for IIoT and IoT has become increasingly complex while at the same time creating more M&A opportunities.