M&A Activity in 2021 A Lower Middle Market Perspective

Mergers & acquisitions came back with a bang in 2021. After being sidelined with fear and restrictions due to COVID-19 in 2020, the US private equity market shattered historical records with $1.24 trillion in transactions across 8,624 deals in 2021.


  1. The surge in transaction volume was supported by plenty of dry powder, the country’s successful vaccination program, ongoing government stimulus, and low-interest rates.

  2. The Financial Services sector witnessed the most transaction activity, followed by the Technology, Media & Telecom (TMT), Healthcare, Industrials, and Consumer Discretionary sectors.

  3. Deal size matters. For lower middle market transactions, the trailing 3 quarters of Selling Price / EBITDA averaged a historical high of 7.6x for deals $10 to $250 million, compared to 4.4x for transactions below $10 million. Multiples varied significantly across sectors.

  4. Companies showed resiliency in 2021, with EBITDA margins improving to 13% compared to 11% in 2020, driven by a reduction in Capex and more restrictive budgetary policies.

  5. Supply chain issues and a tight labor market most impeded growth in 2021.

  6. The longstanding seller-friendly M&A market has been driven by a massive overhang of private equity and corporate cash chasing a limited number of quality transactions. More transactions are on the horizon for 2022 with attractive debt financing, special purpose acquisition companies (SPAC) needing to deploy capital, and companies re-evaluating their strategic options as they adjust to the post-pandemic environment.

  7. Digital transformation is viewed as the most significant driver of M&A activity over the next 12 months, followed by capturing synergies between the businesses.




Breaking down US PE's trillion-dollar year.

The blistering pace of activity helped drive a boom across all deal sizes, sectors and types. Access the 2021 Annual US PE Breakdown report sponsored by Bridge Bank, Golub Capital and Baker Tilly.


Dealmakers look forward to an active market in 2022.

Winding down from a frantically busy year of M&A transactions, investment professionals are looking ahead to another active market, even if it’s not expected to be quite as busy. Access the 2022 M&A Activity Outlook Survey sponsored by S&P Global Market Intelligence.



Featured Partner

Through careful planning and the creation of a virtual family office, Brad and his team work to help his clients reach their life goals, connect with their philanthropic vision, establish their legacies, and provide meaningful opportunities for future generations. He works with business owners, executives, and high net worth families with net worth of $5 to $100 million.


Brad Maienschein

CEPA® Financial Advisor

UBS Wealth Management | La Jolla, CA

(858)-551-9428 | brad.maienschein@ubs.com







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About Pacifica Advisors

Pacifica Advisors is a seller-centric lower middle market advisor providing M&A services to companies with $5 to $150 million in revenue in California and Mexico. We combine our expansive industry and transactional expertise with highly engaged institutional advisors to maximize value in selling your business. We help our clients with their sale, acquisition, financing, transaction planning and strategic growth objectives across 12 different industries.




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