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Mergers & Acquisitions: 2019 Year in Review

02/17/2020 Keith Carlson

What it Means for the Trajectory of the Market

As we explained in our recent article, What’s in Store for 2020 M&A Activity?, VonLehman believes there are a number of positive trends that should support a robust 2020 M&A environment, one which will once again favor sellers. Specifically, we believe that 2020 M&A transaction volume should be higher than or on par with the 2019 totals, driven mostly by activity in the first nine (9) months of 2020. Full-year 2019 data has now begun to finalize, so we wanted to share those trends and statistics to give everyone perspective on what ‘higher than’ or ‘on par with’ actually means.

Deal Volume

Aggregate U.S. MA volume totaled 13,999 in 2019. In comparison, 13,767 deals were completed in 2018. The gain represented a year-over-year increase of 1.7%. These totals are impressive in light of what many considered to be a very strong 2018 M&A year. Trying to ‘slice’ the data has been difficult, by any resource’s measurement. In attempting to observe trends within various transaction size categories (the size of the deal), you might be tempted to think there were sizeable year-over-year declines and that the trends were less favorable. Why would there be such a solid year-over-year increase in aggregate/totals, but such large declines throughout the various transaction category sizes? This is because many more undisclosed terms deals were announced in 2019 than in the previous year, thus making classification impossible. With a lack of known values, undisclosed transactions don’t have a category to fit into. Although the vast majority of transactions within a given database are typically comprised of undisclosed transactions, this year’s contribution percentage was very high in relation to those in years past. In 2019, 78% of transactions were undisclosed; this can be compared to 72% in 2018, 69% in 2017, and 72% in 2016. What is the moral of this data’s story? Be careful when listening to the people who describe 2019’s activity as decreased or subdued relative to 2018. In aggregate, it was just as strong a year as 2018, if not stronger, and the various transaction size categories likely were as well. Yet, the undisclosed transactions detracted from their respective total statistics. 


Valuations remained very strong in 2019. For U.S.-based middle market activity (deals that are less than $500MM in size), the average multiple paid (defined as Purchase Price divided by EBITDA) was 9.2x, which was up substantially from 2018’s total of 8.8x (a 4.2% increase). 2019’s higher totals were driven by the final two (2) quarters, which showed valuations north of 10.0x. The first two quarters of 2019 were much weaker than the trends observed in 2018, so the Q3 and Q4 trends certainly caught many by surprise. These valuation statistics obviously span a fairly wide range of transaction sizes and industries, so applying them to a company, regardless of its size and industry, would be rash. To determine what trends were observed for a Company of a specific size in a specific industry, you would need to consult with a reputable M&A advisor or investment banker.


As in any year, sectors fell in and out of favor depending on various factors. The U.S. sectors that saw the most momentum in Q4 2019 (with ‘momentum’ defined as Q4 2019 vs. Q4 2018 increases) by deal count were Industrial Services (19%), Technology Services (5%), Commercial Services (3%), Producer Manufacturing (4%), and Electronic Technology (2%). Conversely, the sectors that saw the largest declines were Non-Energy Minerals (-36%), Process Industries (-17%), Consumer Non-Durables (-19%), Transportation (-19%), and Finance (-3%).


The good times persisted for sellers in 2019. We expect that momentum to continue in most, if not all, of 2020. For guidance related to all services on the buy or sell-side, contact VonLehman’s M&A specialists today at kcarlson@vlcpa.com or 800.887.0437.

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