What are the latest M&A trends in Europe?

By Mark Carmichael

While the world continues to operate in the shadow of a global pandemic, national lockdowns, and their economic and social aftermath, cautious optimism is emerging. There are signs of recovery in many parts of the world, multiple vaccines are being developed that raise the prospect of an end to the health crisis, and many workers are returning to the factory or office.

The pandemic has exposed flawed business models and overleveraged companies and has caught others with excessive customer or supplier concentration. On the other hand, those businesses with high levels of recurring revenue from a diverse mix of profitable customers find themselves particularly in demand. The pandemic has accelerated many emerging trends, especially the importance of connectivity and remote working. Enterprise software has continued to thrive, and STS Capital has experienced increased demand from prominent global technology firms for private, mid-market firms. Further, emerging technologies that are disrupting traditional powerhouses – Fintech in particular – have remain in demand from strategic investors. “Mission-critical” business and IT services are also frequently sought by strategic buyers.

Many business owners ask if now is the right time to sell a business. The answer today is the same as ever: “it depends”. STS is running multiple successful M&A processes for clients and we have also advised clients to wait until the market changes or to consider alternative structures. We would never use a one-size-fits-all approach and advise each client based on their specific commercial and industry dynamics.

Successful M&A transactions between well aligned strategic buyers and sellers can open new markets, accelerate innovation, improve customer service, and generate shareholder value. Today’s environment has highlighted the fact that those companies with the right mix of resources and capabilities will thrive while others struggle. STS Capital Partners continue to be the experts at identifying and executing value creating M&A strategies for owners of private, mid-market businesses.

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