NEWS RELEASE                                                                                   September 2023

Where is the Trillion Dollar AWE Market Going?

The Air, Water, Energy industry should grow at a faster rate than GDP.  There is ample opportunity for unique solutions to unmet needs. On the other hand, the market is vulnerable to policies of governments around the world.

Sugar cane growers are involved in many aspects of air, water, and energy.  They make sugar with the help of liquid filters.  They can make ethanol and use residual waste to generate energy. They employ air pollution control systems to ensure clean operations.

Cane sugar is primarily produced in a few countries such as India and Brazil. So, sugar from cane is a microcosm of a very international industry investing heavily in rotating equipment, filtration, separation, drying, mixing, and combustion.

The market is international

The first principle in predicting the AWE market future is to understand that it is about as international as any market could be. The big coal producers are not the big iron producers who are not the big copper producers.  This has resulted in international companies who are the purchasers of AWE products.

Not surprisingly it takes international companies to best serve these international customers.

Power plant scrubber firms have been on a 40-year world journey. There was a $10 billion/yr. market in the U.S in the 80s followed a few years later in Japan.  By 1990 Europe was the major purchaser.  China was the big purchaser in the 2005-15 period.  Now India is peaking, and the growth is in S.E. Asia.

The environmental orientation drives internationalism

The AWE industry both is the cause and solution for CO2 emissions to the atmosphere.

Asia is adding more coal fired boilers than are being retired in the U.S. and Europe. But these plants could be greener than wind or solar by burning biomass and sequestering the CO2. Environmentalists now realize that BECCS achieved by converting coal plants is the only economically feasible carbon negative option.

 A very attractive carbon neutral option is to generate power in remote areas through solar or other renewable means and then use it to convert water to hydrogen.  This hydrogen in a liquid form or converted to ammonia can then be shipped anywhere.

AWE companies are so international that the corporate location can be misleading

It is a mistake to think of ABB as a Swiss or European company when it is comprised of very successful subsidiaries around the world.  Neway is a Chinese valve company but due to acquisitions has a strong presence in the U.S. and Europe. Many U.S. companies have set up manufacturing plants in China. The products are offered locally as well as to other countries in Asia. Export of components to the U.S. is also common.

Isolationist policies hurt the AWE industry

Policies such as the tariffs on Chinese imports may be good or bad for the U.S. generally but they are clearly bad for the AWE industry. They simply have added to the price of AWE products purchased in the U.S.

Support for the war in Ukraine is obvious for an international industry which benefits when territorial boundaries are respected.

Incentives to increase R&D needed

The U.S. tax policy which for a few years allowed companies to expense R&D rather than amortize it is expiring. This is particularly detrimental to the AWE industry.

Industry EBITDA is around 15% but should be 30%. It is an industry with rapidly evolving needs and therefore should be served by companies willing to take some risks to seize the opportunities. In general government subsidies for AWE research have failed.  Instead, success has come from small industry efforts such as the successful development of hydraulic fracturing of shale.

The conclusion is that the expensing rather than capitalizing of R&D will be a step in the right direction.

The future of the AWE industry should be bright if not dimmed by government policies.

For more information contact Bob Mcilvaine at 847 226 2391 or This email address is being protected from spambots. You need JavaScript enabled to view it.

NEWS RELEASE                                                                                   August 2023

Suppliers Need to Provide the Value Propositions to OEMS, AE’s and Distributors

Suppliers should prepare value propositions showing why their product should be selected for a particular locality, application, and product in every niche.  The use by distributors can be very effective.

The value to the supplier and purchaser is clear.   The problem has to be specified and the details of the solution need to be included. This solution is comparative.   The contrast can be to doing nothing or buying from a competitor. Mcilvaine is posting value propositions to help purchasers with their decisions.

The value proposition includes both the problem and solution. Typically, the purchaser understands the problem better than the supplier. That is not always true. Gas turbine suppliers who are remotely continually monitoring turbine parameters at thousands of sites have insights that the individual purchasers do not have.

The marketers include the various types of distributors including solutions, convenience and catalog.  The influencers include architect / engineers and OEMs who include the products.

Each category has varying quantities of knowledge.  In addition to the suppliers and purchasers there are architect/engineers (AEs), system OEMS, solutions distributors, convenience distributors, and catalog distributors.

There are varying degrees of knowledge of both the problem and solutions. The organized access to Value Propositions will be of considerable value to OEM system suppliers, architect Engineers, and various types of distributors.

Many value propositions need the input from more than just the purchaser.  AEs and OEMS have knowledge the suppliers need to acquire. They may understand the problem better than the supplier.  The solutions distributor is very likely to have insights relative to the problem.

Solutions distributors may also provide the solutions segment of the value proposition.  They deal directly with the customer and have the details on the successes.

In fact, the suppliers will be well served to work with solutions distributors and prepare value propositions jointly.

Here are estimates of the knowledge prior to the value propositions.

The solutions distributor is very likely to have more knowledge of the customers’ problems than does the supplier. He is probably furnishing other products to address the problem. They can be complementary. If he also supplies piping around the valves or pumps, he has additional insights. He may even be providing the process equipment such as mixers or dryers which use the product.

Convenience and catalog distributors will be able to compensate for their lack of problem knowledge by linking to the supplier propositions on their websites.

Problem Knowledge Percent Compared to Supplier

The solutions distributor is likely to have completed value propositions for the supplier product which are relevant to the location and specific customer. The very fact that a supplier has solutions distributors rather than his own sales force indicates that he is not attempting to prioritize the solutions knowledge. His focus may be on achieving general product superiority. It is then up to the solutions distributor to create the value proposition for a specific case.

Where suppliers are using convenience or catalog distributors, there is the opportunity to prepare hundred or thousands of value propositions which the distributors can display through links. The choice of value propositions should be based on niche forecasts indicating opportunities of $10 million/yr. or more with 30% EBITDA and 20% market share.

Solutions Knowledge Percent Compared to Supplier at 100%

In some cases, the solutions distributor can create the value proposition with a package of products. If the distributor of a pump also provides a skid with the pump, valves, motors, and controls already assembled he changes the pump value proposition.  The EBITDA for the package can easily exceed 30%.  However, the pump manufacturer may not benefit. This is why several private equity firms have been acquiring combinations of pump, valve, and distribution companies capable of assembling skids.

The most valuable packages can be a product combined with continuous remote monitoring and guidance.  Product suppliers seeking to increase EBITDA can do so if they are the package supplier and not a sub-contractor.

The value propositions are being posted in the AWE Productivity Hub.  It is part of the Most Profitable Market Program.

Details are found at www.mcilvainecompany.com

Bob Mcilvaine can answer your questions at 847 226 2391 or This email address is being protected from spambots. You need JavaScript enabled to view it.

NEWS RELEASE                                                                                   September 2023

Acquisitions Should Be Guided by Most Profitable Market (MPM) Program

Niche analysis greatly improves the quality of acquisition decisions and also the subsequent integration.

The performance of an acquired company is best anticipated by analyzing each niche. In the example a candidate is pursuing 110 niches for sales of $220 million.

 The niches fall in 3 value categories with varying EBITDA and revenue CAGRs. In effect there is a valuation of 3 separate companies, 110 niches, and 1100 sub niches.

The potential acquisition is not serving one market.  He is pursuing an aggregation of niches.

Ask the salesmen and they will tell you that they are pursuing many sub-niches. In a company with revenues of $220 million salespeople can identify 1100 sub niches and 11,000 sub-sub niches.  The problem is that these analyses are not shared and may not even be recorded anywhere.

The acquiring company will determine the extent to which the acquisition will boost revenues and profits. Financial strength of the parent, production synergies, and global acumen can be a positive force. Sales synergies are best evaluated with the MPM approach and the synergy of niches. A niche can be one product and two territories or two products and one territory. If the acquired product is sold to the same customers for the same projects, there is the opportunity for substantial EBITDA improvement.

Ingersoll Rand and Atlas Copco are large compressor companies. They have been acquiring pump and valve companies. In LNG and hydrogen, you compress the gas to the point of liquefaction.  You then need pumps for the liquid. Valves are required before and after both the compressor and pump.

The performance of the combination is more important than the individual products. So greater EBITDA can be achieved. Revenue increases because there is just one task of validating the value proposition.  The advantage of being the first in the door is proven.  A package will be evaluated before individual products.

One acquisition strategy has involves buying distributors, pump, valve, and piping companies. The products can be assembled on a skid and delivered ready to operate.  By eliminating welding and assembly on site a substantial premium for the package can be achieved.

One EBITDA boosting strategy for system suppliers is to acquire companies who are supplying them with components. Andritz, Alfa Laval, and GEA all own pump companies.

Companies making the main products in a system e.g., mixers, dryers, filters, separators, or combustors frequently buy companies making the auxiliary products. Donaldson did just the opposite. As a filter manufacturer it purchased a company making both filters and bioreactors which create the product to be filtered.

With each acquisition comes the question of how much independence to allow. With the MPM program this question is less relevant. The decisions are made at the local level.  They result in value propositions identifying the products and superiority for the application. So, the basis is collaboration at the local level. Whether this is voluntary or institutionalized is of lesser importance.

An acquirer should realize that the MPM niche analyses will be highly valuable both in the initial evaluation but as a way to provide integration in the most optimal manner.

A truism is that cost data is a reference and a guide whereas market data is just a reference. The market data appearing in financial statements and consultant reports is a reference. It may be sufficient for stock purchase decisions but no more useful for acquisition decision making than single entry bookkeeping of detailed costs.

Mcilvaine offers an Air, Water, Energy Most Profitable Market Program focused on the niches.

A company with an MPM program has the following for each sub niche:

Facts x factors = sub-niche forecast x value proposition x validation = 20% + share.

For a potential acquirer, the analysis of sub-niche success will greatly improve the analysis.  One of the major pump companies made a recent presentation predicting long term growth in pharmaceuticals, water, and chemicals but a shrinkage in energy. However, there is a huge potential hydrogen market. An even greater potential is in Bioenergy, Carbon, Capture, Sequestration (BECCS).  This is carbon negative and therefore is becoming the top choice for environmentalists. It also involves more valves and pumps than any other process.

80% of the present market is in the UK. So, this geographic niche component is significant.

If an acquirer is pursuing a company who cannot supply niche data, Mcilvaine can cost effectively provide far more than just the typical reference data.  This is only possible because of systematic analysis of products, suppliers, geographies, industries, and processes.

For more information on the Most Profitable Market Program click on www.mcilvainecompany.com

For more information on acquisition support data contact Bob McIlvaine at This email address is being protected from spambots. You need JavaScript enabled to view it. or 847 226 2391

NEWS RELEASE                                                                                   August 2023

Niche Profits from Prediction to Achievement

30% EBITDA and 20% market share can be predicted for each suitable niche. But it is a circular process. MHI is predicted to be the leader in BECCS.  Their development of a reagent to capture 99% of the CO2 is a game changer. AES Clean is the leader in cell and gene cleanrooms. But this is an industry where new technology from single use process equipment to integrated decontamination systems are affecting sales and profits.  So, if a prediction is going to be the basis of business strategy it has to take into account all relevant facts and factors.  This analysis also is the basis of the Value Proposition where the supplier seeks customer validation that the product will be the best for his specific problem.

The Most Profitable Market Program has introduced the AWE Productivity Hub to complete the circular process emanating from the niche forecasts.

The program can be instituted one niche at a time. The ROI can be as high as 50-1. This means that the first niche investment quickly funds others.

For more information contact Bob Mcilvaine at 847 226 2391 or This email address is being protected from spambots. You need JavaScript enabled to view it.