HORIZONS | BDO'S GLOBAL VIEWOF MID-MARKET DEAL ACTIVITY 11
NORTHAMERICA FRENETIC PACE OF ACTIVITY SLOWS
The M&A markets in North America slowed somewhat from the frenetic pace of Q2 but conditions for deal-making remained resoundingly positive throughout Q3. Despite the respite, 2021 is on track to set records both in terms of number of deals as well as dollar volume of transactions. The unprecedented deal-making environment is linked to the overall liquidity-driven economic recovery which reached a pace not seen in decades but did show signs of slowing in Q3, as GDP estimates were reduced slightly with supply chain and inflationary pressures taking hold. Valuations remained buoyant as earnings expectations continue to grow and the competition for deals has never been more apparent. Domestic corporates, multinationals, financial sponsors and family offices are all actively seeking to deploy capital given low interest rates and a strong underlying economy.
Corporates are now focused more than ever on deploying abundant, low-cost capital to accelerate growth and expand market share. The capital markets are highly supportive with sustained low interest rates, a healthy banking sector and highly receptive equity markets. Such conditions combined with renewed CEO confidence to deploy capital is fueling increased deal flow. Corporates were slow to join the M&A fray coming out of the pandemic but have since ratcheted up their interest in deal-making, and more recently, used their considerable purchasing power to win a larger percentage of competitive deal auctions. Technology continues to be the top sector both in terms of dollar volume and number of deals. Given the impact of the pandemic, new entrants and tech disruptions are redefining business models and changing the way of life. As a result, emerging industries such as TeleHealth, FinTech, and CleanTech are becoming areas of focus for M&A. In addition to seeing industry boundaries converge, we are also seeing the convergence of multiple technologies.
BIG PICTURE
• Overall dollar volume and number of deals slows from record-setting Q2 • Full-year 2021 on track to be most active year ever recorded • TMT and Industrials deal-making lead other sectors by a wide margin • Private equity activity robust representing one-third of all M&A activity.
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