Why the M&A Market Lit Up in 2020 and Is Riding the Big Wave Into 2021

2020 will go down in history as a year of countless records. We wish most did not happen, we are thankful for many that did and look forward to the many “green shoots” that are bringing great promise to the new year.

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But here’s what no one expected—behind the headlines of gloom and doom, there was also another reality:  many businesses experienced an acceleration in their growth and, after the initial fog lifted, the deal floodgates opened. The result? We had our best year since we started Intrepid in 2010.

We closed a record number of transactions and some of the drivers were:

Massive Liquidity—Record levels of undeployed capital and liquidity on corporate balance sheets drove sponsors and strategic buyers back to the market with ravenous appetites.

Willing Lenders—With default rates remaining low and loan demand sluggish, lenders became ever more anxious to fund transactions.

Visibility on Performance—Once it became clear how COVID was impacting various sectors, buyers came roaring back to sellers who continued to grow through the crisis.

Modified Deal Processes—Buyers, sellers, lenders, and advisors, all modified their transaction processes to adapt to the virtual world.

Expected Tax Increases—Many business owners accelerated their liquidity plans to lock in tax rates expected to rise under a potential Biden Administration.

Spike in Add-On Acquisitions—Many sponsors accelerated their add-on acquisition strategies to back proven teams and take advantage of weakened competitors.

Record Valuations—Multiples hovered at record levels, as the scarcity of quality sellers and buyer interest created a seller’s market.

At Intrepid, we took on the pandemic roller-coaster head-on. It tested our team with endless hours of screen time, but we emerged stronger and re-energized from the smiles and gratitude we received from our clients.

Here is how we helped our clients and closed a record number of deals:

  • Advised them to focus on liquidity, adjust their forecasts, and adapt their models increasingly to the digital economy;
  • Adapted our processes to the virtual environment;
  • Focused acquirers on credible proformas removing the COVID effect and highlighted our clients’ ability to adjust their models to weather the crisis; and
  • Used creative structures to bridge valuation gaps.

Some of our other achievements were:

  • Delivered great strategic value to our parent’s commercial banking clients through differentiated advisory services and “value creation” workshops;
  • Published 10 industry reports in our industry groups, showcasing our bankers’ deep knowledge of the industry sectors we serve;
  • Experienced significant growth in mandates and closed transactions in our key industry groups:  Beauty & Personal Care, Commercial & Consumer Technology, Healthcare, Software & Services, Digital Media, Food & Beverage & Agriculture, Lifestyle Brands, Industrials, and Business Services;
  • Grew our Buy-Side Advisory Group with a record number of new mandates and closed transactions;
  • Added seven talented professionals to our team;
  • Gave six interns an exceptional experience notwithstanding the virtual environment imposed by the pandemic; and
  • Ended the year with near-record backlog of engaged mandates and unprecedented momentum.

As always, we look to add top talent to our firm and are actively looking for senior bankers to join our Software & Services, Healthcare, and Industrials practices. We look to 2021 with great hope for ending the pandemic, deep appreciation for our teammates and friends in the business community, and gratitude to our clients.