Word on the Street: Are Acquisitions Leads?

What are we hearing here at Camoin?

Our engagement professionals at Camoin speak to businesses day in and day out often talking about the latest industry trends. Recently, (mostly with COVID to blame) companies have been talking a lot about mergers and acquisitions and have noted the following trends:

• Canadian firms are seeking to expand into the United States market by acquisition
• Companies across all industries are very much in a wait-and-see process and are eagerly waiting for business as usual to return
• Companies are seeking to acquire smaller companies to diversify into other industries

Often CEOs and business owners will talk about their business strategies which in recent months have included several conversations centered around acquisitions. There is a perception among some companies that acquisition offers an easier transition than organic growth, however as economic development professionals we know that ease of business growth by expansion or acquisition is highly dependent on the area. Economic developers in communities can work with businesses looking to expand to quickly secure existing buildings, offer benefits to build to suit, offer financial incentives, and assist with workforce connections to get businesses the talent they need.

What is the data telling us?

The US economy steadily grew its share of businesses in the years following the Great Recession in 2008 up until 2020 when the economic impacts of COVID-19 caused the number of businesses to contract. Government mandated closures and increased health protocols led to lack of revenue streams for businesses, resulting in some businesses to close permanently. This trend is expected to continue into 2021 with 2022 looking promising for business growth.

Throughout 2020 and into 2021, many companies reevaluated their position. Low interest rates combined with low valuations of certain businesses have led to an uptick in merger and acquisitions. Industries with the most merger and acquisitions in the United States include commercial services, technology services, and finance.¹

Want to know more about this trend?

Here are some additional resources:

• What startups are talking to us about for their location decisions
• Examining the local value of economic development incentives
• What’s next: Leveraging mergers and acquisitions with incentives
• The six types of successful acquisitions

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