LOS ANGELES, CA / ACCESSWIRE / March 12, 2021 / 2020 will go down in history as a year of countless records. We wish most did not happen; we are thankful for many that did and look forward to the many "green shoots" that are bringing great promise to the new year. But here's what no one expected-behind the headlines of gloom and doom, there was also another reality: many businesses experienced an acceleration in their growth and, after the initial fog lifted, the deal floodgates opened. The result? A record number of transactions closed in the last quarter of the year. Global M&A in Q4'20 reached its highest quarterly total in five years. In the U.S., M&A activity kept pace, with 1,469 deals with aggregate value of $544.2 billion closed in Q4, a 77% rise in value from Q4'19.
So how did businesses plan and manage in the COVID environment? Those that could not adapt rapidly shut their doors permanently. Many others innovated, adjusted their models, embraced the digital economy, and even experienced unexpected growth.
Here are some of the drivers that contributed to record M&A activity in 2020:
Massive Liquidity-Record levels of undeployed capital and liquidity on corporate balance sheets drove sponsors and strategic buyers back to the market with ravenous appetites.
Willing Lenders-With default rates remaining low and loan demand sluggish, lenders became ever more anxious to fund transactions.
Visibility on Performance-Once it became clear how COVID was impacting various sectors, buyers came roaring back to sellers who continued to grow through the crisis.
Modified Deal Processes-Buyers, sellers, lenders, and advisors, all modified their transaction processes to adapt to the virtual world.
Expected Tax Increases-Many business owners accelerated their liquidity plans to lock in tax rates expected to rise under a potential Biden Administration.
Spike in Add-On Acquisitions-Many sponsors accelerated their add-on acquisition strategies to back proven teams and take advantage of weakened competitors.
Record Valuations-Multiples hovered at record levels, as the scarcity of quality sellers and buyer interest created a seller's market. At Intrepid, we took on the pandemic roller-coaster head-on. Here is how we helped our clients and closed a record number of deals:
- Advised them to focus on liquidity, adjust their forecasts, and adapt their models increasingly to the digital economy;
- Adapted our processes to the virtual environment;
- Focused acquirers on credible proformas removing the COVID effect and highlighted our clients' ability to adjust their models to weather the crisis; and
- Used creative structures to bridge valuation gaps.
About Ed Bagdasarian
Ed's professional career spans more than three decades and his accomplishments include helping build two preeminent middle-market M&A advisory firms, overseeing their sale to two of the largest financial institutions in the world, and advising some of the leading entrepreneurs and middle-market companies in defining M&A and capital transactions.
Ed is currently the CEO and a Founding Principal of Intrepid Investment Bankers, a Los Angeles-based investment bank providing M&A, capital and strategic advisory services to entrepreneurs and middle-market companies. He is responsible for setting and executing the firm's vision.
In 2019, nine years after founding Intrepid, Ed and his partners joined forces with MUFG Union Bank to become the bank's advisory unit and a member of the Mitsubishi UFJ Financial Group (NYSE: MUFG), the world's fifth largest financial institution. As the investment banking arm of Union Bank, Intrepid works in close partnership with the bank's commercial banking and wealth advisory organizations to deliver best-in-class services to middle-market companies throughout their life cycle.
Connect with Ed
About Intrepid Investment Bankers
Intrepid provides M&A, capital raising, and strategic advisory services to entrepreneurs and middle-market companies in various industry sectors. Our heritage breeds a culture that embraces teamwork, tenacity, and creativity to help our clients win big. We believe that every company has an entrepreneurial passion that drives it and a story that defines it. Our team delivers results through skillful positioning and relentless execution. Based in Los Angeles, Intrepid augments its international capabilities through its active participation in Oaklins, an exclusive global alliance of M&A advisory firms.
Source for M&A activity stats: White & Case.
SOURCE: Intrepid Investment Bankers