M&A markets were in uncharted territory in 2020 when the COVID-19 pandemic hit, and it wasn’t easy on deals. Yet, after speaking with M&A decision makers at 700 U.S. businesses and private equity (PE) firms in the middle market ($50MM to $1B in revenue), the overall outlook for 2021 is encouraging despite some ongoing challenges.

Survey data suggests that a rush of middle‑market M&A is likely in 2021. If you are considering M&A, these findings may help shape your overall strategy, from the timing of your deal to the question of engaging an M&A advisor.

Key Takeaways

We are already seeing green shoots in the M&A market, in terms of deals coming back to life. The survey data shows broad support for this trend to gather momentum through 2021.”

— Ralph Della Ratta
Chairman, M&A Advisory

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Ralph Della Ratta


Nearly half of middle-market companies see the broader economy improving in 2021. While these figures are not quite as rosy as prior years, they certainly aren’t pessimistic. Furthermore, business leaders are even more confident in their own corporate outlooks for the coming year.

Positive Outlook for the Year

Company Outlook: 62% (2019),65% (2020),55% (2020) U.S. Economy Outlook: 57% (2019),61% (2020),47% (2020)

M&A Remains the primary driver of growth

The majority of business leaders expect corporate growth to continue to come from M&A activities. Buyers are looking to achieve strategic growth through either bolt-on or transformative acquisitions. For sellers, 76% of companies surveyed desire to sell off parts of their companies to pave the way for future growth.

Corporate Growth Strategy

M∓A: 60% (2019),57% (2020),65% (2020) Organic: 40% (2019),43% (2020),35% (2020)
Kevin Burke

The operating environment has changed for many businesses, but the fact remains that a mature company is going to get growth either from taking share or from buying growth.”

— Kevin Burke
Managing Director

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Top Reasons to Buy in 2021

  1. Increase revenue and growth (61%)
  2. Improve operational efficiency (41%)

Top Reasons to Sell in 2021

  1. Strategic growth opportunities (67%)
  2. Take advantage of current valuations (44%)


Nearly half (49%) of company and (41%) of PE respondents characterize year-end 2020 M&A as “weak.” However, all clearly agree that a turnaround is ahead in the next 1-3 years.

Year-end 2020 Assessment of M&A Market as Weak

49 percent

of middle-market companies

41 percent

of PE firms

Timeframe for a Turnaround

Middle-market companies: 8% (1H 2021),28% (2H 2021),31% (2022-2023),33% (2024+) PE Firms: 15% (1H 2021),30% (2H 2021),29% (2022-2023),27% (2024+)

New administration AND COVID-19 are top drivers

The economy is typically the most significant factor in a company’s consideration of an M&A transaction. In 2021 however, COVID-19 and the policy implications of the new administration are top drivers. If the Biden administration is able to pass its proposed tax hikes for capital gains, M&A activity could spike.

Percentage of respondents more likely to pursue M&A as a result of:

Jim Childs

Private equity investors are right to watch the tax changes that could be coming for the capital gains rate. Policy implications of the new administration could meaningfully alter deal economics.”

— Jim Childs
Head of M&A Advisory

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Healthy valuations and deal volumes are expected

Upbeat expectations for corporate valuations and deal flow in 2021 provide a decidedly optimistic M&A forecast. When it comes to valuations, the majority expect stable or higher valuations.


New administration 45%, COVID-19 44%, The economy 26%
Ryan Sugrue

We are expecting 2021 to be a robust year in terms of deal flow, especially in the second half. 2020 left a backlog of pent-up demand for M&A. With strong valuations, we think a lot of PE firms and liquidity-seeking owners will be eager to get to the market.”

Diminished interest in international deals

Interest in finding an international deal partner is down among both buyers and sellers; a consistent decline since 2019.

Kevin Burke

As international deals are inherently more complicated, the drop in sellers’ interest is a sign they are looking for execution certainty.”

— Kevin Burke
Managing Director

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Decreased interest in global M&A, but still strong – for buyers

Buyers: 56% (2019),51% (2020),47% (2021) Sellers: 49% (2019),41% (2020),33% (2021)

M&A advisors help overcome declining deal confidence

Seller confidence in deal completion is down starkly and they are looking for help in finding potential offers – a need that didn’t make the list of top priorities previously.

Confidence in Completing a Deal

Buyers: 78% (2019),84% (2020),84% (2021) Sellers: 77% (2019),81% (2020),61% (2021)

Sellers' Reasons for Engaging an M&A Advisor

  1. Find potential offers (67%)
  2. Structure financing (35%)
  3. Get the best pricing (33%)

Actions to Consider in 2021

The M&A outlook is positive in many respects, but the prolonged pandemic and the implications of a new administration have impacted deal confidence. Looking ahead, you may want to:

  • Take advantage of the revived M&A market in the first half of the year
  • Pay close attention to the expected tax plan revisions by the new administration
  • Utilize M&A advisors to help overcome diminished deal confidence to increase certainty of execution


We’re ready to listen and share insights and ideas to help position your business for optimal value creation.

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