The M&A landscape is evolving rapidly. This report delves into the latest trends and insights shaping the mid-market segment, where an increasing number of listed and large companies are actively participating and professionalizing their capabilities.
Market Trends
The mid-market M&A sector is witnessing significant changes. Many large and listed companies are now actively involved in this space, recognizing its potential for growth and optimization. This sector’s attractiveness stems from the sheer number of companies, opportunities for financial and operational improvements, and the ability to engage in both buy-side and sell-side activities. High demand for investment opportunities means sellers can anticipate multiple serious buyers. Factors such as industry convergence, ESG and DEI (Diversity, Equity, and Inclusion) demands, and economic volatility are diversifying M&A objectives and deal structures. Notably, the rise of search funds is making waves, with more entrepreneurs becoming first-time CEOs by acquiring established businesses through the ETA model, offering a faster and less risky route to business ownership.
Strategy Trends
Modern M&A strategies now require a broader perspective as growth and capability assets are often found beyond traditional business boundaries. Buyers are adopting an ‘outside-in view’, shifting focus from ‘scale’ to ‘scope’ deals. ESG and DEI criteria have become crucial in investment decisions, driven by high consumer and LP demand. Research indicates that active acquirers and investors outperform, particularly during economic volatility. Successful acquirers are proactive, systematically searching for targets, building relationships, and continuously investing in their M&A brand. Private equity firms are under pressure to generate quick returns by selling assets, shifting priority to DPI over the traditional IRR. This shift reflects tough market conditions and creates more sell-side opportunities as more companies or stakes are put up for sale.
Execution Trends
In today’s competitive landscape, the ability to swiftly access markets and execute transactions is more crucial than ever. The success rate of M&A deals has significantly improved, with successes now outnumbering failures at approximately 70%. This improvement underscores the evolving strategies and increased sophistication in modern M&A execution. Technology plays a pivotal role, supported by optimized processes and professional playbooks. A comprehensive approach to identifying new acquisition targets has become essential, even for industry leaders with a strong market presence. Ambitious companies actively seek opportunities and remain receptive even when not actively pursuing a sale. Sellers recognize their attractiveness and avoid premature exclusive engagements.
Digitalization of M&A Processes
Geopolitical tensions have accelerated digitalization across all industries, including mid-market M&A. New digital tools enhance process efficiency and enable a more proactive M&A strategy, even for companies previously inactive in transactions. Video calls have become a standard part of nearly every deal process, and AI solutions provide quick data access and streamline tasks. These new working methods deepen understanding of potential deal partners in the broader ecosystem and reduce geographical barriers. Sourcing, screening, and scoring deal targets have become a matter of clicks, revolutionizing the way M&A processes are conducted.
This report highlights the dynamic nature of mid-market M&A, where evolving strategies, technological advancements, and shifting market demands are driving new trends and opportunities. Download the full report:
https://insights.dealsuite.com/en/blog/ma-mid-market-trends-report-2024
