While several proposed regulatory and tax policy changes under the Biden Administration, such as a new executive order that ratchets up antitrust scrutiny in financial services, healthcare, transportation, and other industries, may negatively affect M&A activity, the current deal flow through the first half of 2021 remains robust. According to Pitchbook, companies have completed an estimated 8,193 deals as of June 30 for a total value of $1,121.2 billion. This is up from $769.6 billion in deal value recorded for the same time period in 2020.
Deal multiples have remained relatively consistent since 2018. Median EV/EBITDA multiples are 10.2x year-to-date compared to 10.3x in 2020.
Not surprisingly, the number of add-on deals continued to outpace platform and strategic investments. Activity in financial services, particularly banking consolidation, drove dealmaking in Q2. The proportion of add-ons to overall transactions has increased from 65.3% in 2020 to 70.1% of year-to-date transactions.
Backlogs in global supply chains, high commodity prices, labor shortages, and the Delta variant are things to watch as we head towards the end of 2021.
If you would like to discuss M&A market conditions with Colonnade, contact:
Director of Business Development