quarter two middle market m&a report 2020

As the COVID-19 pandemic continues to spread, Q2 2020 has registered a massive drop in M&A activity. The total value of lower middle market deals (transaction value less than $1 billion) announced in Q2 was $23.7 billion – 60.3% below the same period the year before. Volume, meanwhile, fell 24.3% year over year and 25.7% quarter over quarter to 2,340 deals. Compared to Q1 2020 when the impact of the pandemic wasn’t quite clear yet around the world, the collapse in dealmaking in Q2 was significant.

Much of the drop in the deal flow is attributed to the current global health crisis and resulting macroeconomic and market turmoil caused by COVID-19. Many buyers chose to either abandon or postpone the deal process until they get more clarity into what the near future holds. Many M&A deals depend on financing availability, and now faced with an uncertain macroenvironment and tightening of credit markets, buyers are forced to restructure terms and levels of debt versus equity.