Last year turned out to be another strong year for M&A activity in the U.S. Among mid-market leaders the prevailing sense is that the backdrop for 2020 is favorable, but the urgency to get deals done has ticked downward. We saw nuances in this year’s outlook which suggest that the year ahead could be one of comparative restraint for M&A deals:

Jim Childs Co-head of M&A Advisory

What is the current state of the M&A market?

Broad Economic Strength Is Expected

The press may talk of an impending economic slowdown, but mid-market leaders do not appear to be convinced

2020 Performance Expectation

No Single Risk Is of Primary Concern

  • 19%Interest rates
  • 17%Tax policy changes
  • 16%Regulatory environment
  • 16%Labor market

Hiring Will Continue

34%Increase hiring

43%Remain the same

21%Decrease hiring

Organic Growth Opportunities Tick Upward

With a solid economic outlook, businesses expect to grow more through organic strategies than through acquisitions

Expected Sources of Growth

Fewer Sellers and Buyers Are Looking Abroad for M&A Opportunities

Consider an international sale?

2019
2020

Consider an international purchase?

2019
2020

Fewer Firms Are Looking to Sell or Buy the Entire Business

Sell the entire business?

2019
2020

Buy the entire business?

Yes
Purchase core or ancillary

Continued Valuation Strength Is Anticipated

Valuations remained strong through 2019, and mid-market leaders are expecting more of the same for 2020

2020 Company Valuations

Jason Wallace Managing Directo of M&A Advisory

What is the current state of corporate valuations?

Sellers are Tempering Their Expectations

Valuations will increase
Extremely confident in completing a deal this year

While Buyers Remain Confident

Valuations will increase
Extremely confident in completing a deal this year

Still a Sellers’ Market, but Fewer in the Queue

In an environment of high valuations, it might seem surprising that the sellers’ pool has shrunk

Lowest Percentage of Seller Activity in 4 Years

Just under half of mid-market leaders are considering selling in 2020—18% fewer than a year ago

How do sellers view the M&A market?

Buyers Continue to Wait Patiently on the Sidelines

Just over half of mid-market leaders are considering buying in 2020—16% fewer than a year ago

How do buyers view the M&A market?

Mid-market Leaders Who Experienced a Decrease in Deal Solicitations

The Value of the Advisor Remains Steady

The majority of sellers and buyers indicate they are likely to hire an advisor if they engage in M&A activity this year

Seller Rationale

Buyer Rationale

Ready for M&A Advisors Who Think Like Owners?

Photo of Jim Childs

Jim Childs

Co-Head of M&A Advisory
Citizens Capital Markets

404.461.4602

jim.childs@citizensbank.com

Connect with me on LinkedIn.

Photo of Ralph Della Ratta

Ralph M. Della Ratta

Co-Head of M&A Advisory
Citizens Capital Markets

216.589.9557

ralph.m.dellaratta@citizensbank.com

Connect with me on LinkedIn.

Download the 4-page summary highlighting key findings from the survey.

About Citizens Capital Markets

Citizens Capital Markets provides highly customized financial advisory solutions to leading middle market companies across a focused set of industries. Clients within industrial, business services, consumer, healthcare, technology and transportation verticals benefit from our tailored approach to mergers and acquisitions, capital raising, financial restructuring, financial opinions and other valuation services.

As a part of Citizens Financial Group, Citizens Capital Markets is able to leverage the strength of one of the oldest and largest financial institutions in the U.S. to accelerate the delivery of valuable ideas and execution capabilities beyond what a traditional M&A advisory firm can do.

Methodology

The survey was conducted among U.S.-based middle market businesses ($50MM to $3B in revenue) that are currently engaged in or open to mergers and acquisitions activity. Core sectors included healthcare, technology, industrial, consumer services, B2B services, transportation and other industries.

528 business executives directly involved in decision-making related to mergers and acquisitions (Owners/Partners, CEOs, Presidents and other C-level and Directors) completed a 15-minute phone or web-based survey between November 14, 2019 - December 6, 2019.


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