The Greybull Perspective | Q2 M&A Trend Analysis

It was predicted that 2024 would show a resurgence of the M&A market and while there has been gradual growth, it hasn’t been quite the anticipated boom.[1] There has been a breakthrough in the value of investments as volume slowly climbs back, however, this is predominately the case for larger transactions. Investors are still primed to deploy capital, and sectors like the pre-middle market where Greybull specializes are filled with opportunity.

Greybull defines the pre-middle market as comprised of businesses with revenues of $5 to $50 million and EBITDA under $5 million. These pre-middle market companies have proven business models, exhibited growth potential, and are operated by nimble innovators with deep niche expertise – a winning combination in today’s environment. For dealmakers, understanding the trends in the M&A market is critical in capitalizing on emerging opportunities. With a tide rolling toward more accommodating market conditions, these pre-middle market businesses can be further developed and positioned as valuable acquisition targets for larger financial and strategic buyers seeking to enhance their competitive edge.

Beyond the Headlines: What You Need to Know

Steady Growth, Not Surge

The M&A market is experiencing a period of sustained growth, building on the momentum that began in late 2023. This positive trajectory reflects increased confidence among businesses and investors.

Increasingly Favorable Market Conditions

As interest rates stabilize and the economic climate becomes more predictable, strategic acquisitions and partnerships become more appealing. This is a continuation of the trend that emerged as inflation fears subsided.

Sector-Specific Strength

The technology, energy, and industrials markets are experiencing particularly robust deal activity. Companies in these sectors are actively streamlining operations, navigating regulations, and acquiring strategic assets. This targeted approach allows them to optimize their performance and maintain a competitive edge.

Adapting to the Evolving Landscape:

The days of colossal, one-size-fits-all mergers are giving way to a more strategic and cost-conscious approach. High credit costs are prompting creative deal structuring, with investors exploring:

  • Minority Stakes: Offering minority investments can bridge valuation gaps and provide companies with valuable capital while maintaining operational control.

  • Strategic Partnerships and Reinvention: Joint ventures and licensing agreements provide alternative avenues for companies to access technology or markets without full ownership. M&A is increasingly serving as a catalyst for transformation. Businesses are using acquisitions to expand markets, diversify offerings, and leverage technology for operational excellence and value creation. Data and AI have been pivotal in this reinvention. Companies that harness and integrate these technologies are better positioned for long-term success.

This focus on finding the right strategic fit and maximizing value ensures long-term success for all parties involved.

Partnering with Greybull:

Greybull’s approach to transactions underscores the importance of a professional advisor’s role but with a focus on building a partnership that maximizes value and efficiency. Here’s how Greybull continues to achieve strong partnerships:

  • Purpose: We value advisors who understand and share our concentration on the pre-middle market. Greybull is committed to empowering small businesses and the U.S. economy by maintaining a steady focus on established, profitable businesses with less than $5 million of EBITDA. Advisors who recognize the transformative potential of these companies tend to be the best source of transactions for Greybull.  

  • Patient Capital: Unlike many firms, Greybull is not limited by rigid timelines or deal structures. Our extended investment horizon allows us to focus on the long-term fundamentals of a business, partnering with companies possessing strong growth potential regardless of short-term market fluctuations. This flexibility empowers us to craft creative solutions that meet the specific needs of both sellers and entrepreneurs.

  •  Partnership: Greybull provides a comprehensive suite of resources, including a full-time team of dedicated Operating Partners. The firm brings to bear significant resources in the form of a full-time, dedicated Operating Partner team. These individuals cover a range of capabilities from Sales & Marketing, Technology, Recruiting, Accounting, and more. Our Operating Partners are not only critical in building value post-transaction, but also during the due diligence process. Greybull views the transaction process as a collaborative effort, working closely with intermediaries to navigate complex situations and identifying opportunities for post-transaction value creation during the diligence phase. Our Operating Partner team brings operational expertise to the table, ensuring a smooth integration and maximizing the potential of the partnership.

The evolving M&A landscape increasingly requires a blend of strategic thinking, adaptability, and innovative approaches. Greybull is a flexible partner, focused on pre-middle market businesses, with the resources to efficiently navigate the M&A market and thoughtfully work with intermediaries and founders alike to secure transactions and develop growth plans to drive future value creation.

1.    Source: S&PGlobal Market Intelligence | Data compiled March 18, 2024. Analysis includes worldwide M&A deals announced between Jan. 1, 2022, and March 15,2024.
2.    Source: Bloomberg May 31, 2024 | BarclaysM&A Report