Perspectives on the Electrical Power Solutions Market (Baird)

Summary

• Baird's electrical power solutions M&A transactions since 2021 total ~$17 billion across 23+ transactions, with ~40% strategic buyer outcomes and ~14x average EV/EBITDA.p.4
• Global data center power demand is expected to rise by 50% by 2027, with an increase of up to 165% by 2030.p.10
• Electrical / grid peers trade at a 1.7x multiple premium and data center peers at 3.3x versus the industrial market.p.15
• Global M&A deal counts are ~10 – 12% lower Y/Y, with sector deal values about one third of YTD activity.p.20
• U.S. private data center construction reached a seasonally adjusted annual rate of $34,750M in February 2025.p.6

Key insights

1. Despite tariff uncertainty, data center supply chains have remained resilient and tech giants have largely upheld their capex plans.p.6
2. Rack power density could exceed 100 kW per rack, currently 50 kW, with advanced services reaching up to 250 kW per rack by 2030.p.10
3. Hyperscalers are investing in SMRs (small modular reactors) to meet energy demands.p.9
4. Transformers emerged as a central focus as utilities scale transmission to meet rising demand.p.8
5. Electrical / grid peers have been the most resilient to recent market volatility.p.16
6. Services peers pulled back relative to the broader industrial market on macroeconomic concerns and near-term moderation in public capex.p.15
7. Two out of the top ten YTD deals were in the data center sector, which maintains M&A leadership.p.20