M&A Outlook for 2021

By Generational Equity

02/22/2021

Recently Citizens Bank surveyed M&A decision-makers at 700 U.S. businesses and private equity (PE) firms in the middle market ($50MM to $1B in revenue), and their overall outlook for 2021 is encouraging despite some ongoing challenges.

Based on our sources, as we have said before, other organizations are also predicting a possible record year for mergers and acquisitions in 2021.

This is how Citizens Bank summarized their findings:

The majority of business leaders expect corporate growth to continue to come from M&A activities. Buyers are also looking to achieve strategic growth, whether they prefer bolt-on acquisitions (38%), transformative acquisitions (33%) or are interested in both (28%). For sellers, 76% of companies surveyed desire to sell off parts of their companies to pave the way for future growth.

As the chart above clearly demonstrates, M&A as a growth strategy is actually being pursued by a larger percentage of these professionals in 2021 than in the prior two years!

And, from a buyer’s perspective, here are some of the compelling reasons to make an acquisition in 2021:

For sellers, the top two reasons to pursue an exit are:

I would add that proposed tax law changes that have been suggested in the tax year 2022 could also be another motivating factor for sellers, who can sell this year and potentially avoid a large tax burden for waiting.

Based on the significant activity we saw in the last 6 months of 2020, our deal teams are poised to have another record year in terms of deal closings.

That certainly was a welcome change when compared to March and April 2020, when dealmakers had to radically adjust their methods given restrictions on flying and related concerns.

Unfortunately, many business owners have put their own exit plans on hold under the faulty assumption that buyers are not active and deals are not getting done. Nothing could be further from the truth – and we are vigorously encouraging anyone who had plans to sell in 2020 and delayed, to reach out so we can have a confidential discussion of current trends in the market.

To learn how we can help you optimize your exit journey and find an optimal buyer in today’s market, please leave us your contact info and we will be in touch. Or call us at 972-232-1121.

Carl Doerksen is the Director of Corporate Development at Generational Equity.

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