In this Q4 2021 update, we provide data and highlights for Southeast (Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, South Carolina and Tennessee) middle-market (total transaction value < $USD 500mm) M&A transactions, including volume, value and enterprise value multiples. This update focuses on M&A trends in the energy, materials, industrials, consumer discretionary, consumer staples, health care, financials, information technology, communication services, utilities and real estate industries.
Currently ranked among the largest CPA firms in the U.S., Bennett Thrasher is a premier provider of professional tax, assurance, consulting and wealth management services to businesses and high net worth individuals. Since 1980, our integrity has earned our client’s trust, and our culture of supporting professional and personal growth has created a long-term, dedicated team.
Speak to one of our professionals today to learn how we can be Better Together.
Highlights
Total M&A volume increased by 0.9%, from 447 transactions in Q4 2020 to 451 transactions in Q4 2021, largely driven by a 14.0% increase in the industrials industry, from 114 transactions in Q4 2020 to 130 transactions in Q4 2021
Total reported M&A value increased by 97.9%, from $5.1 billion in Q4 2020 to $10.1 billion in Q4 2021, mainly due to a substantial increase in the consumer discretionary industry, from $465.0 million in Q4 2020 to $2.0 billion in Q4 2021
Average reported transaction size increased by 46.3%, from $74.9 million in Q4 2020 to $109.6 million in Q4 2021, somewhat driven by Procore Technologies’ $499.0 million acquisition of Express Lien
Average reported enterprise value (“EV”)-to-revenue multiples decreased from 2.5x in Q4 2020 to 1.3x in Q4 2021, partially driven by Rexel USA’s acquisition of Mayer Electric Supply Company for 0.4x revenue
Average reported EV-to-earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples decreased from 9.5x in Q4 2020 to 6.1x in Q4 2021, somewhat driven by Russel Metals’ acquisition of Boyd Metals for 2.8x EBITDA
Q4 2020 vs. Q4 2021
Volume, Value and Average EV Multiples
M&A volume involving strategic buyers increased from 357 transactions in Q4 2020 to 379 transactions in Q4 2021 (6.2%) while M&A volume involving financial buyers remained relatively flat over this same time period
Reported M&A value involving both strategic and financial buyers increased, from $3.5 billion in Q4 2020 to $8.3 billion in Q4 2021 (139.7%) and from $1.5 billion in Q4 2020 to $1.6 billion in Q4 2021 (8.2%), respectively
Average reported transaction size involving strategic buyers increased from $63.8 million in Q4 2020 to $111.7 million in Q4 2021 (74.9%), while average reported transaction size involving financial buyers decreased from $168.0 million in Q4 2020 to $116.9 million in Q4 2021 (30.4%)
Average reported EV-to-revenue multiples for transactions involving both strategic and financial buyers decreased from 2.7x in Q4 2020 to 1.4x in Q4 2021 and from 1.1x to 0.7x over this same time period, respectively
Average reported EV-to-EBITDA multiples for transactions involving strategic buyers decreased from 9.8x in Q4 2020 to 4.2x in Q4 2021, while average reported multiples for transactions involving financial buyers increased over this same time period, from 8.0x to 11.7x
* Note: Average reported EV-to-revenue multiples include one transaction involving financial buyers for Q4 2021. Average reported EV-to-EBITDA multiples include one transaction involving financial buyers for Q4 2020, Q3 2021, and Q4 2021. Source: Capital IQ
Better Together Spotlight: Buy-Side Due Diligence Services Assist Public Client in the TMT Sector
Bennett Thrasher recently assisted a public client in the TMT sector with buy-side due diligence for an add-on to their platform. The target had both a sell-side intermediary and an existing sell-side diligence report performed by a top 50 U.S. CPA firm. Through our quality of earnings analysis we were able to uncover fundamental flaws in the methodology used in the report which resulted in material changes to revenue, earnings and to the definition of net working capital and net debt. This new information affected the purchase price trading at a revenue multiple and resulted in additional adjustments to the purchase price for the newly defined debt-like items. As a result, the client was able to renegotiate the deal using the results of our analysis. The target and the sell-side advisors agreed that the Bennett Thrasher report was the most accurate representation of the target’s financials and the report helped to successfully re-trade the deal and to move forward with the acquisition.
Our M&A Advisory Services
For most business owners, a merger or acquisition is the most significant financial event of their lifetime. Buyers and sellers face many hurdles in reaching their goals of maximizing business value and minimizing risk. The experience of transaction advisors can be instrumental to achieving these goals.
Our team is comprised of dedicated advisors that can assist you across various stages of your transaction process, including:
Financial due diligence
Tax due diligence/structuring and valuation
Sell-side readiness
Exit planning
If you are embarking on a transaction opportunity, please contact one of ourM&A Transaction Advisory Servicesleaders by calling 770.396.2200.
Bennett Thrasher, 3300 Riverwood Parkway, Suite 700, Atlanta, GA 30339, 770.396.2200
