Q2 2021 Middle Market M&A Update

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GCG’s Q2 2021 Middle Market Update provides an overview of the latest trends in the market, including the recent performance of select sectors and the state of the middle market M&A environment.

Key findings include the following:

    • GCG’s proprietary middle market industry sector performance index has continued to show positive results in all industries as the market continues to recover from the pandemic. Automotive, Technology and Industrials led all industries with each recording annual returns over 90%. This compares to the S&P 500 index annual return of approximately 38%.
    • GCG’s small-cap public company index revenue and EBITDA multiples have continued to increase since July 2020. As of June 2021, the median EBITDA multiple has increased nearly six turns since April 2020. This means current multiples are higher than they were pre-pandemic and represent a dramatic shift in valuations in 2021. We anticipate earnings to grow dramatically as the pandemic subsides and a slight reduction in these multiples over the next few quarters.
    • Middle market public and private company transaction deal value and volume for Q2 2021 were higher than any of the past 11 quarters. Values and volumes in Q2 of 2021 grew 45.6% and 36.9%, respectively quarter-over-quarter, and they grew 330% and 203%, respectively year-over-year. Deal activity is still expected to continue at a strong pace throughout 2021 as interest rates stay low, the amount of uninvested capital stands at an all-time high, and deals put on pause in 2020 continue to be brought back to market as we saw in Q2.
    • Q2 deal activity by sector was substantially different from Q2 2020 in terms of the sectors with the most market share. Healthcare remains the dominant sector at 19% of middle market transactions announced and closed in Q2 2021. However, that is down from 30% in Q2 of 2020. A few other industry sectors became more prominent over the past year with Information Technology, Industrials, Consumer Discretionary, Financials, and Materials increasing their share of deal activity.

Click here for the full update.

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