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    The Impact of COVID-19 on U.S. M&A

    5 min read time

    Updated 4/6/2021

    We are exploring the effect of COVID-19 on mergers and acquisitions in the United States. As this historic pandemic continues to evolve, we will track the number of COVID-19 cases and compare them to the overall M&A deal volume and provide market observations. Check back each week for updated information.  

    The Impact of COVID-19 on Middle Market M&A

    For purposes of this analysis, PCE focused on data trends beginning March 22, 2020 when new cases of COVID-19 increased significantly.

    Total M&A Market

    • M&A activity continues to feel the effects of COVID-19. Total U.S. M&A volume is down 13.2% (1,330 transactions) in December 2020 compared to the same period in 2019 (1,532 transactions).
    • Despite lower deal volume, December 2020 is a standout month with six industries surpassing the deal volume of December 2019. Aerospace and Defense, Business Services, Banking, Finance & Insurance, Diversified Industrials, Food & Agriculture, and IT & Telecom all closed more deals in December 2020 than in December 2019.
    • Even with the strong December for some industries, total M&A volume between March 22 – December 31 is down nearly 25% (9,651 transactions) compared to the same period in 2019 (12,790 transactions).

    Effects of COVID-19 by Industry

    Jump to industry details by clicking on any industry listed below:

    Aerospace, Defense & Government Contracting

    Banking, Finance & Insurance

    Building Products & Construction

    Business Services

    Consumer Discretionary

    Diversified Industrials

    Food & Agriculture

    Healthcare

    IT & Telecom

    Power & Energy

    Transportation & Logistics

    Aerospace, Defense & Government Contracting

    • Aerospace, Defense & Government Contracting saw its strongest month of 2020 having closed 9 transactions in December 2020.
    • The industry's total transaction volume between March 22 – December 31 is down over 8% (34 transactions total) compared to the same period in 2019 (37 transactions).
    • Strategic buyers drove 25 out of the 34 deals that closed between March 22 – December 31. In comparison, 2019 saw over 56% of transactions (21 transactions) completed by strategic buyers in the same period.

    Banking, Finance & Insurance

    • The Banking, Finance & Insurance industry saw nearly 15% increase in monthly transaction volume in December (54 transactions) compared to the same month in 2019 (47 transactions).
    • Strategic buyers drove nearly 95%[1] of all transactions (473 transactions) between March 22 – December 31. Nearly identical to 2019, which saw nearly 96% of transactions (513 transactions) completed by strategic buyers in the same period.
    • Over 75% of the acquisitions made between March 22 – December 31 (381 transactions) were in the insurance subsector.
    • Despite the strong December, industry M&A volume is down 6% (504 transactions) during the time frame of March 22 – December 31 compared to the same period in 2019 (536 transactions).

    Building Productions & Construction

    • Building Products & Construction industry M&A activity between March 22 – December 31 is down nearly 31% (273 transactions) compared to the same period in 2019 (393 transactions).
    • Between March 22 – December 31, Construction and Engineering (211 transactions) made up over 77% of the total closed transactions, which is greater than the 73% of transactions in the same period in 2019 (288 transactions).
    • Strategic buyers drove nearly 87% of transactions closed between March 22 – December 31 (224 transactions). In comparison, 2019 had over 90% of transactions completed by strategic buyers within the same period.

    Business Services

    • Business Services' monthly M&A activity in December 2020 (63 transactions) exceeded December 2019 M&A activity (57 transactions).
    • Research and Consulting Service transactions continue to lead the sectors transaction volume making up 60% of the deals closed between March 22 – December 31 (231 transactions).
    • Strategic buyers drove over 91% of all transactions completed between March 22 – December 31 (342 transactions). This is comparable to 2019, which saw nearly 89% of transactions (392 transactions) closed by strategic buyers within the same period.

    Consumer Discretionary

    • The industry's total M&A activity between March 22 – December 31 is down over 33% (859 transactions) compared to the same period in 2019 (1,285 transactions).
    • Strategic buyers drove nearly 85% of transactions between March 22 – December (629 transactions). In comparison, 2019 saw nearly 81% of transactions (877 transactions) completed by strategic buyers within the same period.
    • Transaction volume within Hotels, Resorts and Cruise Lines, a subsector of the Consumer Discretionary industry, has been impacted significantly during COVID-19. Total subsector transaction volume is down over 68% (108 transactions) between March 22 – December 31, compared to that of the same period in 2019 (340 transactions).

    Diversified Industrials

    • Total M&A activity for Diversified Industrial industry between March 22 – December 31 is down nearly 26% (394 transactions) compared to the same period in 2019 (531 transactions).
    • Strategic buyers drove over 86% of transactions between March 22 – December 31 (329 transactions). Similarly, 2019 saw nearly 87% of transactions (446 transactions) completed by strategic buyers within the same period.
    • Transaction volume comprised of targets primarily engaged in Trading and Distribution continues to lead the industry with over 42% of transactions (166 transactions), followed by Industrial Machinery with nearly 37% of transactions (145 transactions).

    Food & Agriculture

    • The Food & Agriculture monthly M&A volume is up over 34% in December 2020 (47 transactions) compared to the same period in 2019 (35 transactions).
    • Strategic buyers drove nearly 89% of transactions between March 22 – December 31 (254 transactions) compared to 2019 which saw nearly 84% of transactions (258 transactions) completed by strategic buyers within the same period.
    • Nearly 44% of the transactions closed between March 22 – December 31 (135 transactions) comprised targets engaged primarily in the subsector of Packaged Foods and Meats.

    Healthcare

    • Despite the Healthcare industry's essential industry status, total transaction volume is down nearly 24% (1,020 transactions) between March 22 – December 31 compared to the same period in 2019 (1,336 transactions).
    • Strategic buyers drove nearly 89% of closed transactions between March 22 – December 31 (873 transactions). In comparison, 2019 saw nearly 86% of transactions (1,091 transactions) completed by strategic buyers within the same period.
    • Nearly 27% of the transactions (271 transactions) closed between March 22 – December 31 were comprised of targets engaged primarily in Health Care Services. In comparison, 2019 saw nearly 30% of transactions (394 transactions) comprised of targets in the same subsector within the same time frame.

    IT & Telecom

    • The IT & Telecom industry saw a small increase in transaction volume in December 2020 compared to the same month in 2019. The industry saw a 1% increase in transaction volume in December 2020 (212 transaction) compared to the same period in 2019 (210 transactions)
    • Strategic buyers drove nearly 91% of transactions between March 22 – December 31 (1,375 transactions). This is nearly identical to same period in 2019 where over 90% (1,598 transactions) of M&A activity were completed by strategic buyers.
    • Transaction volume comprised of targets primarily engaged in the Application Software subsector of the IT & Telecom industry accounted for over 40% (624 transactions) of all transaction volume between March 22 – December 31, 2020 nearly identical percentage to the nearly 40% (728 transactions) in the same period of 2019.

    Power & Energy

    • Total M&A transaction volume for the Power & Energy industry between March 22 – December 31 is down 19% (320 transactions) compared to the same period in 2019 (395 transactions).
    • Utility Transactions, a subsector of the Power & Energy industry, accounted for nearly 59% of the transactions (188 transactions) closed between March 22 – December 31, 2020. In a distant second place, companies engaged in Oil and Gas Storage and Transportation make up nearly 17% of volume in the same time frame (53 transactions).
    • Strategic buyers drove over 81% of transactions between March 22 – December 31 (249 transactions). Similarly, 2019 saw over 82% of transactions (306 transactions) completed by strategic buyers within the same period.

    Transportation & Logistics

    • Transportation & Logistics had less monthly M&A volume in December 2020 (16 transactions), compared to December 2019 (24 transactions).
    • Total M&A transaction volume for the Transportation & Logistics industry between March 22 – December 31 is down over 21% (116 transactions) compared to the same period in 2019 (147 transactions).
    • Transaction volume within the Trucking subsector made up over 42% of transactions (49 transactions), followed closely by Air Freight and Logistics, making up nearly 33% of transactions (38 transactions) between March 22 – December 31, 2020.
    • Strategic buyers drove over 88% of all transactions closed between March 22 – December 31 (99 transactions). In comparison, 2019 saw nearly 80% of transactions (107 transactions) completed by strategic buyers within the same period.

    1. Percentage of strategic vs financial buyers throughout commentary based on total transactions with published buyer data available.

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