Multi-Unit Market Update – Q3 2021

By: Mike McCraw and Nathan Kelly

Multi-Unit Community Buzz: Buyer Interest Persists Despite Delta Concerns

“The pandemic has accelerated consumer behavior meaningfully. We have incremental disposable income because people aren’t traveling, so they’re spending it more on these consumer experiences.”

Venky Ganesan, Partner at Menlo Ventures

“The M&A momentum points to a fundamentally strong market looking ahead. This pace of dealmaking could continue for the next 18-24 months, with new financing solutions and sectors driving activity.”

Andrea Guerzoni, Global Vice Chair at Ernst & Young

“It may take longer than some firms anticipate to find qualified workers (especially with unemployment so lucrative). But we do think the logjam is temporary as firms and workers find each other again.”

Nela Richardson, Chief Economist at ADP

Consumer Multi-Unit: Key Indicators & Takeaways

Multi-Unit Companies look to seize upon increased consumer spending as pandemic restrictions loosen.

  • Although consumer confidence has slipped moderately
    recently, growth since the beginning of the year has been
  • Confidence slipped modestly from June’s reading of 128.9,
    the highest level since February 2020.
  • Consumer spending continued its rebound in Q2, boosted by
    government stimulus payments and the rising number of
    COVID-19 vaccinations.

  • The increase in non-durable goods spending in Q2 has been
    driven by food services and accommodations.
  • We’re seeing a pivot from consumption tilted towards goods
    – many of which can be delivered – to in-person services
    such as travel, dining and entertainment.
  • As the pivot from goods consumption into services is
    happening, we’re seeing surge pricing in everything from
    airfares to hotel rooms, with more consumers going out to
    eat than in the past.

Middle Market M&A Overview


Despite the fear due to the COVID-19 Delta variant, the
market remains active because of tax law discussions,
recovering credit markets, and high levels of buyer dry

  • Combined, announced, and recently completed deal
    counts continue to near record levels.
  • As the M&A market continues to persevere,
    confidence in the overall health of the market will
    continue to grow.

Middle market M&A activity is up substantially year over year
in terms of both value and volume.

  • We anticipate elevated middle-market PE activity
    will continue through the remainder of 2021.

Q2 activity points suggests the rest of 2021 will be a robust
deal making environment.

The looming promise of a tax rate increase will drive a sense
of urgency for sellers to close in 2021.

  • Some buyers are offering gross-up payments to
    cover the difference when tax rates eventually
    increase, as well as discussing insurance policies to
    cover potential retroactive rate increases
  • As the year comes to an end, many deals will see a
    considerable push to close before the start of 2022.

  • PE funds are seeing an overflowing number of deals
    forcing them to take diligence in their approach.
  • Sellers who were positively affected by the
    pandemic want to take advantage of high multiples;
    those who were challenged are realizing the
    advantages of being part of a larger organization.
Q2 M&A Overview

You can read the full report here.