The year 2020 brought anything but clear vision. No matter who you are, where you’re from, or what you do, chances are you will never forget 2020 and the impact it had on the world. The COVID-19 pandemic is one of those rare events that captures the attention of the entire world and changes life going forward. While we are still dealing with the impacts of COVID-19, let’s take a step back to see the effects on M&A activity in 2020.
With a global lockdown, it’s no surprise that there was a 13.6% drop in total deals and a 9.8% drop in Private Equity deals compared to 2019. The largest YOY monthly decline in total deals was 46.7% in May, and 53.5% in April for Private Equity deals. As firms and employees adjusted to working from home, acquisition activity steadily increased. Deals that were put on hold due to COVID-19 were revisited and in the month of October we saw Private Equity deal activity surpass the previous year for the first time since January. Private Equity investors finished Q4 2020 strong in December with 577 total deals closed, a 48.3% increase from December 2019. The tables below represent the most active firms.
Hugh MacArthur, head of Bain & Company’s Global Private Equity Practice sums it up well in a recent Dry Powder podcast. He used the word “resiliency” to describe 2020 and praises Private Equity firms for protecting assets and getting deals done. Hugh talks about how many industries have fundamentally changed, and even Private Equity firms have gone from analog to digital He emphasizes that adoption of technology is going to be a key to driving change and growth in most industries.
While some industries, like hospitality, were crushed in 2020 others weathered the storm with only a small decline in deal activity. Most surprising was the steep decline of 27.3% in industrial deals compared to construction deals falling only 3.4%. The telecom industry was the only industry that had a small 5% increase in the number of deals closed and an increase in the number of exits by Private Equity firms in 2020.
As we continue to feel the impacts of COVID-19, there is light at the end of the tunnel with the rollout of a vaccine. Deal activity has rebounded, and we have more deals closed this January than in previous years.
Last week’s deals today
February 1 – February 7
~214 deals traded
Deal of the week
Drake Software, a North Carolina based provider of tax software, was acquired by Cinven Group. Deloitte Corporate Finance acted as the sell-side financial advisor. Chambliss Bahner & Stophel provided sell-side legal advice and Ropes & Gray provided buy-side legal advice for this transaction. No terms were provided.
Most active subsectors
- IT: Software & services
- Services: Misc., asset light
- Services: Marketing and related
- Services: Technology and software
- Industrial: Misc. equipment & products
Most active cities
- San Diego
- San Antonio