Capital Markets Update – August 2020


Covid-19 Impacts Middle Market Acquisitions in Q2

Middle market M&A activity has declined significantly through Q2 as COVID-19 severely impacted the number of acquisitions. In our Q2 Capital Markets M&A Update, we take a comprehensive look into key trends and statistics for the recently closed quarter and provide an outlook for the remainder of 2020.

Key Takeaways:

  • Buyers focused internally to mitigate operational and financial disruptions due to COVID-19
  • Lenders concentrated on protecting their loan portfolios
  • Private equity focused on the health of platform investments while primarily pursuing smaller add-on acquisitions
  • Capstone has maintained a healthy deal pipeline of quality targets through Q2 despite seller and buyer hesitancy due to uncertainty

M&A activity is expected to improve towards the end of 2020 and into 2021 aided by factors including:

  • An arsenal of private equity dry powder that needs to be deployed
  • Buyers seeking high-quality targets at lower valuations
  • Forecasted imbalance of supply and demand of targets seeking to sell

Activity will be negatively affected by the following:

  • Interruptions in the U.S. economy due to COVID-19 including lower levels of consumer and CEO confidence
  • Instability in the domestic and global political climates

Insights for Middle Market Leaders

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