Turning Iron into Gold
The industrial sector is undergoing a quiet identity crisis. According to the report, nearly one in five deals in the machinery space is now for a technology asset. But why are companies that bend metal suddenly buying companies that write code?
The obvious answer is “digital transformation.” The non-obvious answer is valuation arbitrage.
Industrial companies typically trade at modest EBITDA multiples (often single digits or low teens). Software companies trade at massive revenue multiples. By aggressively acquiring software assets - like Emerson Electric buying AspenTech to pivot toward a “higher-growth, more diversified software portfolio” - these giants are trying to perform financial alchemy. They aren’t just buying technology; they are trying to trick the stock market into re-rating them. They want to be valued like Tech, not like Iron.
The “CapEx vs. OpEx” War
The report highlights a critical risk: “sales readiness requires a skill in selling subscriptions and outcomes, not just equipment”.
This sounds like standard HR jargon, but it points to a brutal conflict on the sales floor. A salesperson used to selling a $500,000 excavator (a CapEx purchase approved by the CFO) has no idea how to sell a $50/month subscription app (an OpEx purchase approved by a site manager).
The insight here is that the biggest risk in these deals isn’t the code; it’s the customer’s budget. If the acquirer doesn’t fundamentally bifurcate its sales force, the software die on the vine. The “churn” concept is alien to a company that builds machines designed to last 20 years.
The “Do No Harm” Integration
Finally, look at the Hilti example. They bought Fieldwire but kept the software business capable of complementing the core without depending on it.
This flips the traditional M&A script of “integrate everything immediately.” In the machinery-buying-software world, tight integration is often fatal. Corporate bureaucracy strangles software agility. The winners in 2026 are practicing “Loose Coupling” - using the hardware business as a lead-generation engine but letting the software unit run as a semi-autonomous speedboat alongside the tanker. Synergy, in this specific case, is best served cold.
Read the complete report from Bain here - M&A in Machinery and Equipment: The Strategic Rise of Software