2020 was a challenging year for the private lower middle market and widespread operational disruptions, liquidity constraints, and layoffs pushed M&A activity to a six-year low. Companies’ executives were forced to prioritize the immediate health of their own businesses and put long-term acquisition plans on hold. Similarly, private equity firms focused on strengthening their current portfolio at the expense of new deal activity.
Despite these headwinds, the economy has shown resilience, and M&A activity came roaring back in 2021. A total of 5,621 deals targeting companies in the U.S. and Canada were announced between January and March of this year, the second-highest first-quarter total behind 5,781 deals in 2015, according to S&P Global Market Intelligence data. This strong quarterly performance extends a recovery period that began in Q3 of 2020 as companies were able to weather the storm more easily than anticipated due to accommodative monetary policy and fiscal stimulus.
As we approach the halfway mark in 2021, Beacon’s team shares its research on trends in the economy and private lower-middle market.