Axial's Summer 2022 Lower Middle Market Pursuits Report Highlights a Record-Breaking First Half in the M&A Market
NEW YORK, September 7, 2022 (Newswire.com) - Axial, the online M&A platform connecting buyers, advisors, and sellers of small and medium-sized businesses, recently released its Lower Middle Market Pursuits report for the first half of 2022. It documents a record-breaking first half of the year in the lower middle market, despite the well-documented challenges facing M&A at large so far in 2022.
"Inflation, a finally awake Federal Reserve, and more geo-political uncertainty than we've had in a generation hasn't sent lower middle market dealmakers to the sidelines," says Peter Lehrman, founder and CEO of Axial. "For many professional acquirers, this is the environment they've been waiting for. Normalizing EBITDA multiples and higher costs of capital are creating less deal competition."
In the first half of 2022, sell-side activity on the Axial platform grew by 8% to more than 4,900 new deals in market.
Year over year, sell-side activity on the Axial platform - a proxy for lower middle market deal flow - surged by 20% in Q2 and increased by 8% in the first half of the year, with sell-side deal flow in the second quarter topping every other three-month period since 2020. Buy-side activity maintained pace, with new mandates from prospective acquirers climbing 35% year over year in Q2, with overall buy-side activity jumping 30%, year over year.
While these "top of funnel" deal flow metrics set records, Axial's trailing 12-month pursuit rate as of the end of the second quarter, which measures buyer interest in private companies confidentially going to market via the Axial platform, revealed that prospective acquirers have become more discerning over the past year. The average pursuit rate of 12.29% across all available targets as of the end of Q2 represents the lowest reading of the metric over the past two and a half years. In 2021, 37% of all available targets generated pursuit rates above the 15% index threshold, whereas in the first half of 2022, the number fell to only a quarter.
"The hunt for truly recession-proof businesses is on," says Kristina Mayne, Director of Marketing at Axial. "You can see it in the Axial pursuit rate. Technology M&A pursuit rates remain elevated at 16.2%, whereas more discretionary or cyclical categories, such as Food / Hospitality, have seen pursuit rates drop from 16.2% to 13.9% since the end of 2021."
Axial is the online M&A platform for buyers and sellers of American small and medium-sized businesses. The company's pioneering deal sourcing and deal marketing platforms are trusted by professional acquirers, top lower middle market M&A advisors, and transaction-ready business owners. A select list of Axial clients and transactions sourced and executed via the Axial platform can be found here. For more information on Axial, visit www.axial.net.
Kristina Mayne, Director of Marketing
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