News & Resources
Deal Volume & Size Rises in Q1
During the first quarter of 2024, the Northwest Region (Washington, Oregon, Idaho, Montana, Wyoming and Alaska) saw an increase in deals closed, with 142 deals completed. This uptick in deal volume is a positive shift from 2023, a year that saw declining levels of deals closed quarter to quarter. The Q1 increase in the NW aligns with trends in the global market. The increasing M&A activity level may reflect improving sentiment towards macroeconomic conditions, such as the expectation for interest rates to stabilize or decrease in the coming quarters, which lowers the cost of capital for buyers.
In addition to the increase in deal volume, median deal size (capital invested) across middle market deals in the Northwest increased to a median of $40.5 million. This may reveal a return of investor appetite for acquisitions and a willingness from both buyers and sellers to reach mutually agreeable valuations, compared to 2023 when buyers were often unwilling or unable to agree to the sellers’ desired multiples. Another significant factor impacting the M&A market is the record levels of dry powder (readily available capital) currently held by private equity firms, which peaked at $3.7 Trillion at the end of 2023, according to S&P Global. Private equity firms and institutional investors are actively seeking quality investments to deploy stagnant capital and generate returns for investors.
Private Sector Remains Active
Although the first quarter of 2024 saw a resurgence of M&A mega deals, small to medium private enterprises, broadly defined as having under 500 employees, remain attractive targets in the M&A market and continue to make up a significant portion of deal volume. Private companies, especially those in the middle market, tend to be less impacted by macroeconomic fluctuations given their typically lower levels of debt financing, making them ideal acquisitions for both strategic and financial investors. Certain industries including home services, industrials, healthcare, and software are seeing increased growth in deal volume in the Northwest private markets and focus within these sectors is expected to continue into the year. The consistent investment into private companies in these industries demonstrates investors willingness to pay increased prices for quality acquisition targets regardless of macroeconomic factors.
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Led by a team of former business operators and executives who have built and sold companies, Alexander Hutton is a boutique, middle market M&A advisory firm that has completed 225 successful transactions. We offer a unique understanding of what it takes to run a business and an accessible team dedicated to client service. By running a high-touch, competitive transaction process for each of our clients, we are able to help them achieve their ideal outcome.
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