Capstone Partners Quarterly Capital Markets Update - Q3 2021
Capstone Partners Capital Markets Update | Q3 2021

M&A Transaction Activity Continues Historic Year Through Q3 2021

Total closed middle market merger and acquisition (M&A) transactions through Q3 2021 have surged 37.2% over the prior year period. Competition in deal processes has encouraged aggressive bidding behavior, evidenced by the average transaction value through Q3 rising to a record $71.7 million, increasing nearly 29% year-over-year.

Private equity (PE) transaction volume through Q3 has already eclipsed full year 2020 levels, however volume has moderated in the past two quarters with total closed deals falling 16.4% in Q3 from elevated levels in Q2. In addition, middle market PE fundraising has swelled to over $142 billion through Q3, nearing the record setting pace experienced in 2019. As many sponsors have expedited holding times to capitalize on high valuations, general partners (GPs) have sought to raise and deploy capital faster.

When you combine potential increases in capital gains with backlog from the pandemic downturn, the $1.4 trillion of private equity dry powder, and massive amounts of cash on strategic balance sheets, you get a frantic global M&A market that saw over $1.5 trillion in deal activity in Q3 and a new quarterly record.

Jacob VoorheesHead of M&A

Capstone Partners Capital Markets Update Q3 2021

Download the full report for our market outlook and commentary from Capstone Partners’ Head of M&A, Jacob Voorhees, as well as:

  • Capstone’s proprietary middle market valuation index, detailing average EBITDA multiples by sector over the past three years.
  • Commentary on the Leveraged Finance market and how loan volumes and debt multiples have tracked through Q3 2021.
  • Insights from Capstone’s Financial Advisory Services team on the value of an interim executive.
  • Spotlight on the Food Distribution sector outlining historic transaction volume, valuations, and growth strategies of sector participants.

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