Actionable Ideas for Companies and Sponsors

Mid-market Corporate M&A Heats Up

Middle market corporate M&A has returned at a feverish pace with both buy-side and sell-side transactions sparking widespread competition. In 2021 year-to-date, acquisitions of middle market corporate targets between $1.0 and $5.0 billion are up nearly three times relative to 2020 and over 40% relative to 2019. This return to corporate deal making reflects a renewed focus on the pursuit of external growth opportunities and the need for scale, with both large and mid-capitalization corporates often competing for targets in their core markets. Recent examples of competitive activity in the broader corporate middle market arena include the bidding war for Meggitt Plc between Parker-Hannifin and TransDigm in in which TransDigm emerged as a potential topping bidder to Parker-Hannifin’s agreed $8.7 billion takeover. The competition for Meggitt reflects the continuing need for scale in the aerospace and defense industry as suppliers seek critical mass in their dealings with Boeing and Airbus. Also in Europe, where activity levels have been even more robust than the U.S., Hella GmbH became the focus of an intense competition amongst multiple bidders who included Mahle GmbH, Cie Plastic Omnium and Faurecia SE. Faurecia ultimately prevailed with an agreed transaction valued at approximately $8.0 billion. This transaction also reflects the drive for scale as auto parts suppliers position themselves to supply electric mobility products and automated driving services to larger OEMs. Expect continued activity in the corporate arena as mid-market companies seek scale transactions or default to consolidating transactions with larger acquirers.