Q2 2021 Market Update

Deal making activity set a record in the first half of 2021. A combined $456.6 billion worth of total deals in the U.S. closed in the first six months of the year, accounting for nearly two-thirds of all deal value recorded in 2020 (Pitchbook Q2 PE Breakdown). Likewise, add-on activity continued to increase as 74.5% of all buyouts in Q2 were add-on acquisitions, an all-time high. The buy-and-build strategy can take on different forms. Some involve large-scale roll-ups in highly fragmented markets. Others seek opportunistic M&A transactions that allow portfolio companies to pursue specific product, geographic, or operational goals.

There are many reasons for the growing interest in add-on acquisitions. In addition to the multiple arbitrage opportunity, additive deal making presents the opportunity for a platform to expand geographically, diversify its product offerings, and expand in new end-markets. When executed properly, this strategy enables a platform to leapfrog organic growth. The buy-and-build approach also increases the likelihood of a platform being sold in a sponsor-to-sponsor transaction. A company’s track record of successfully completing acquisitions under the first sponsor represents an attractive selling point to the second sponsor. Platforms may be passed between buyers focused on successively larger deal sizes, acquiring add-ons as they go.

The most popular industry for buy-and-build strategies has been financial services. In 2020, 84.8% of all acquisitions within financial services were add-ons (Pitchbook Q2 Analyst Notes). This is in line with general trends for deal making. Based on YoY deal count growth, insurance is the most active sector with 52% deal growth, followed by communications/networking (40%) and IT services (40%) (Pitchbook Quantitative Perspectives). These trends are undoubtedly persisting in 2021. Normandy Advisors has also seen strong growth and interest in the tech-enabled services space, which has, in part, been spurred by the pandemic, and represents an attractive, asset-light opportunity with the potential for margin expansion and add-on acquisitions.

In speaking with industry professionals and well over 300 business owners this year, Normandy recognizes the heightened interest in M&A from both sides of the table. The uncertainty surrounding proposed capital gains tax increases is causing some owners to rethink the timing of their succession plans. Investment banks are staffing up in anticipation of a busy second half to 2021, and middle-market PE firms are looking to act on a potential increase in acquisition opportunities. The second half of 2021 should see deal making, and specifically add-on acquisitions, continue to pick up speed as sponsors put excess capital to work market conditions incentivize transactions.

Summer Intern Spotlight: Get to Know Andrew Luntz


Andrew Luntz joined the Normandy team in early June, bringing the total number of ‘Andrews’ at the firm to three. In just a few short weeks, Andrew has added significant value to several of our retained buy-side searches, drawing on prior experience at a search fund and his strong data management skills. We are very excited to have Andrew on board for the 2021 summer.

Where did Andrew grow up?
Slingerlands, NY, just outside of Albany

Where does he go to school? What is he studying?
Andrew is a rising junior at Boston College where he is majoring in finance and minoring in philosophy

Is he in any clubs at BC?
Andrew is a director of the Boston College Investment Club (BCIC), a student-managed investment fund. Andrew works alongside other BC students to actively manage a portfolio in excess of $1M. Aside from BCIC, Andrew is involved with BC’s investment banking club and plays on the club rugby team

What does he do when he is not in school or working at Normandy?
When he is not in the office, Andrew can usually be found on the golf course with his friends. He also enjoys mowing lawns in his hometown on the weekends

Why did he apply to Normandy Advisors?
Andrew wanted an opportunity to learn about the private equity industry in a small-team environment. Having previously interned for a search fund, Andrew wanted to see another side of the private investment world and understand the role of a buy-side advisor in M&A

Any “fun facts” or unique interests we would now know unless we got to know him?
After taking a class at Boston College, Andrew developed a strong interest and appreciation for architecture and urban development. He has an impressive knowledge of Boston’s architectural history

If Andrew could travel anywhere in the world, where would he go?
Ushuaia, Argentina (also known as the ‘End of the World’)