Horizons Spring/Summer 2021

INDUSTRY UPDATE MERGERS & ACQUISITIONS

M&A Outlook: Comes In Like a Lamb, Out Like a Lion by Ben Barnes, CPA, CGMA & Jeff Sackman CPA, CM&AA A s the country exits the cold winter of 2020/2021, optimism regarding the M&A market is universally held, and strategic investors; however, the capital investment from these buyers did not parallel the amount of cash reserves available.

with an expectation of a seller’s robust market. The sources of these tailwinds are numerous; however, the key drivers can be simply defined to the following: availability of uninvested capital, baby boomers looking to exit their companies, COVID-19 in the rearview mirror, the uncertainty around future changes in tax laws, and cheap debt. Dry Powder – Plan for an Explosion After a brief swoon from the initial COVID-19 outbreak, the 2020 U.S. M&A volume improved as sellers were able to extract some value from private equity (PE) funds

As of March 2020, there was approximately $1.53 trillion of available cash reserves held by PE funds (including VC investors). In comparison, at the end of 2015, there was $0.75 trillion available. Despite the sidelined cash held at the beginning of 2020, deployment was uncertain as PE funds weren’t able to read the tea leaves in deciphering our new world post COVID-19. Now, in 2021, with time distancing the economy from the onset of the pandemic, buyers have the required confidence to

Spring/Summer 2021

23