North American M&A Activity is a Locomotive – Can It Stay On Track?

By Generational Equity


One of the popular themes from those old western movies in the 1950s was the damsel in distress on a runaway locomotive (usually the engineer had been hoisting a few and was out cold). The hero, usually on a white horse would race up, jump on the locomotive and just in the nick of time, before speed derailed the train (and the damsel), he would apply the brakes and save the day. 

M&A activity since mid-2020 has been like a runaway locomotive on steroids! This is how Intralinks recently put it in one of their articles, entitled “North America is on a Fast Track of M&A Activity”: 

Mergers and acquisitions (M&A) deal activity has the momentum of a runaway train right now in the U.S., and there are no signs of a slowdown. Lower borrowing rates and access to cheap capital have been the driving factors after concerns on a changing tax policy influenced deals early last year.

As we all know, right now it's a highly competitive landscape for qualified assets. Unprecedented levels of capital on the sidelines have forced investors to widen their mandates and risk tolerances in search of yield. Multiples are at record highs as companies enter new markets and are willing to pay premiums as they do so. With that entry into new market territory, there are few industries not embracing M&A.

There is also massive deal fatigue. Perhaps this is an embarrassment of riches. After all, the market has been on fire since June 2020 and dealmakers have evaluated and closed more deals than ever. There’s never been a better time to be an M&A dealmaker.

And to that last point I will add: There’s never been a better time to be an owner of a privately held business in North America! The number of deals closed in 2021 was simply staggering. Worldwide, more than $5.6tn worth of deals were closed in 2021, tearing through the previous record of $4.55tn set in 2007 (right before the financial crisis of 2008-2009 hit I might add). And much of this huge worldwide number was based in North America.

Thankfully, 2021 was also a record year for Generational. We closed more deals last year than ever before in our history and passed $7 billion in wealth transferred to our clients since our inception. We take great pride in helping entrepreneurs realize their financial dreams and move on to the next phase of their lives.

In fact, despite all the accolades and awards we have won over the years, being able to help business owners monetize their most valuable asset is reward in and of itself.

If you would like to get on board this runaway locomotive and reap the rewards of your hard work, use the following links to learn more about us, our growth and exit planning conferences, and hear from a few of our clients.

Carl Doerksen is the Director of Corporate Development at Generational Equity.

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