In this Q3 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.
Highlights
Total M&A volume increased by 32.8%, from 311 transactions in Q3 2020 to 413 transactions in Q3 2021, largely driven by a 62.1% increase in the industrials industry, from 66 transactions in Q3 2020 to 107 transactions in Q3 2021.
Total reported M&A value increased by 80.7%, from $3.2 billion in Q3 2020 to $5.8 billion in Q3 2021, mainly due to a substantial increase in the consumer discretionary industry, from $117.3 million in Q3 2020 to $1.7 billion in Q3 2021.
Average reported transaction size increased by 32.2%, from $65.9 million in Q3 2020 to $87.1 million in Q3 2021, somewhat driven by the $450.0 million acquisition of Patientco Holdings.
Average reported enterprise value (“EV”)-to-revenue multiples increased from 1.8x in Q3 2020 to 9.6x in Q3 2021, mainly driven by an investor group’s acquisition of a minority stake in Odyssey Marine Exploration for 72.5x revenue.
Average reported EV-to-earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples decreased slightly from 15.4x in Q3 2020 to 15.3x in Q3 2021.
Q3 2020 vs. Q3 2021
Volume, Value and Average EV Multiples
M&A volume involving both strategic and financial buyers increased, from 260 transactions in Q3 2020 to 327 transactions in Q3 2021 (25.8%) and from 41 transactions in Q3 2020 to 68 transactions in Q3 2021 (65.9%), respectively.
Reported M&A value involving both strategic and financial buyers increased, from $2.7 billion in Q3 2020 to $4.9 billion in Q3 2021 (84.2%) and from $540.9 million in Q3 2020 to $919.9 million in Q3 2021 (70.1%), respectively.
Average reported transaction size involving strategic buyers increased from $70.1 million in Q3 2020 to $98.1 million in Q3 2021 (40.0%) while average reported transaction size involving financial buyers decreased from $77.3 million in Q3 2020 to $57.5 million in Q3 2021 (25.6%).
Average reported EV-to-revenue multiples for transactions involving strategic buyers increased from 1.0x in Q3 2020 to 10.4x in Q3 2021.
Average reported EV-to-revenue multiples for transactions involving financial buyers increased as well, from 4.2x in Q3 2020 to 36.8x in Q3 2021, mainly driven by an investor group’s acquisition of a minority stake in Odyssey Marine Exploration for 72.5x revenue.
Average reported EV-to-EBITDA multiples for transactions involving financial buyers decreased from 15.4x in Q3 2020 to 14.1x in Q3 2021.
* Note: Average reported EV-to-revenue multiples include one transaction involving financial buyers for Q3 2020. Average reported EV-to-EBITDA multiples include one transaction involving financial buyers for Q3 2020, Q4 2020 and Q3 2021.
Source: Capital IQ.
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Better Together: Trusts & Estates Planning Team Assists Client in Large Liquidity Event
Bennett Thrasher’s high-net worth individual group teamed up with the Bennett Thrasher’s tax transaction advisory team and a global law firm to provide estate and trust planning services as well as income tax planning for an individual client in a large liquidity event from the sale of the client’s business. After consulting with the client’s personal financial planners, Bennett Thrasher and the law firm devised several tax planning strategies that were used to ensure the family’s lifetime personal financial goals and philanthropic goals were met. Bennett Thrasher worked with the client years earlier to transfer substantial equity interests to a trust set-up for the benefit of the client’s family. This planning strategy helped eliminate millions of dollars from the client’s taxable estate. More recently, we assisted the client in creating a series of charitable trusts to which the client contributed interests in the client’s business. This planning strategy mitigates income tax and estate tax related to the amounts that were transferred to the charitable trusts, allowing more overall dollars to be available for philanthropic purposes.
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 LLP, 3300 Riverwood Parkway, Suite 700, Atlanta, GA 30339, 770.396.2200
