Illinois Tool Works Analysis

MANAGERIAL FINANCE PROJECT:

A Financial Analysis and Valuation of Illinois Tool Works

Fall 2013

INTRODUCTION & COMPANY PROFILE

According to Analyst Ratings Network’s website (“Illinois Tool Works Company Profile”, 2013), Illinois Tool Works (NYSE:ITW) is a multinational manufacturer of a diversified range of industrial products and equipment with operations in 58 countries. Headquartered in Glenview, Illinois, the company was founded in 1912 (“ITW Profile”, 2013). Interestingly, the business was founded after Chicago financier Byron Smith placed an advertisement in The Economist magazine looking to invest in a manufacturing business (“Our History – ITW”, 2013). A group of inventors with a new idea for gear grinding responded, and the with Smith’s help, the company was born (“Our History - ITW”, 2013). Over one hundred years later, what began as a small venture backed by a venture capitalist has grown into a corporation with more than sixty thousand employees (“ITW Profile”, 2013).

Today, according to Analyst Ratings Network (“Illinois Tool Works Company Profile”, 2013), Illinois Tool Works operates in eight business segments: Transportation; Power Systems & Electronics; Industrial Packaging; Food Equipment; Construction Products; Polymers & Fluids; Decorative Surfaces, and All Others. Illinois Tool Works makes far more than just the gears it began operations with back in 1912. According to the Wall Street Journal, going into 2013 the company owns and operates over 800 business units (Tita, 2013). With respect to the customer segments that Illinois Tool Works focuses on, it is extremely diversified and “primarily serves the construction, general industrial, automotive, food institutional/restaurant and service, food and beverage, electronics, consumer durables, primary metals, and others markets” (“Illinois Tool Works Company Profile”, 2013). The company has been historically noted for an aggressive acquisition strategy. Accordingly, Illinois...