GulfStar Middle Market Commentary – May 2021

Middle M&A deal activity began picking up steam in late 2020 after an unnerving period of broad market
interruption brought on by COVID-related economic shutdowns. Since March, investment bankers had been monitoring the performance of their sell-side clients to assess in real time the impact of those conditions on companies’ performance and marketability. While certain industries remained depressed, primarily those related to travel and hospitality, the prospect of vaccine rollouts, approval of a second fiscal package and a soaring stock market combined to reignite market activity by the end of 2020. For companies that shrugged off the effects of the coronavirus or had established a new baseline of activity, the buyer universe was increasingly undeterred by high unemployment rates, new COVID variants and the pandemic’s substantial economic impact on small businesses. The Q4 ‘20 result was a rebound in deal volume, rising valuations, greater availability of debt, and a decrease in the utilization of
representation & warranty insurance.