HORIZONS | BDO'S GLOBAL VIEWOF MID-MARKET DEAL ACTIVITY 09
NORTHAMERICA A RECORD YEAR FOR DEAL-MAKING
As expected, M&A activity continued to forge ahead in 2021. A market with an abundance of cash held by both PE funds and strategic buyers, lifted restrictions driving pent-up deal demand and improved business conditions all contributing to a surge in M&A. With all deal-making participants now familiar with operating in a pandemic- influenced M&A environment, 2021 started positively and remained so during the year, setting new records in M&A activity. Underlying pent-up demand left over from 2020, along with low interest rates, continued government stimulus and strong debt and equity markets all contributed to an unprecedented increase in deal volume and value. The total value of North American deals in both the USA and Canada were the highest recorded in history, both individually and combined. North American mid-market M&A volume maintained a furious pace throughout 2021 with 2,636 deals compared to 1,825 in 2020 and 2,213 in a pre-pandemic 2019. There
was a corresponding increase in aggregate deal dollar value in 2021 with USD 352bn in deal value versus USD 207bn in 2020. Q4 2021 was the slowest quarter of the year, with 441 deals and USD 75bn in total deal value. Certain 2020 deal trends continued into 2021 including strong valuations, virtual due diligence and more focus than ever on earnings sustainability. Industry participants deployed the tools used to navigate an early pandemic deal environment to drive another very active year. The factors driving M&A deal volume and value, whether it’s in the mid or up-market are no secret and have been prevalent and pervasive for years. In both Canada and the USA these include a record amount of dry powder, partially fueled by low interest rates, strong equity markets, pressure in some cases to deploy capital and strategic buyers continuing to explore inorganic growth strategies. A seller’s market remains, with the amount of underlying market liquidity driving competition and valuations along with many business owners turning their focus back to growth
BIG PICTURE
• Deal volume up 44% in 2021 compared to 2020 and up 19% compared to pre- COVID 2019 • Deal value up 70% in 2021 from 2020 and 63% compared to 2019 • PE buyers were still active with 143 deals, representing 32.4% of volume and 29.1% of value.
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