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Citizens Annual Middle Market M&A Outlook Finds Continued Strength

Despite record valuations and deals in 2021, survey respondents not anticipating slowdown in 2022

Middle-market companies and private-equity firms foresee an extremely strong year for the M&A market in 2022, with bullish forecasts for both deal volumes and for company valuations, according to a Citizens survey of 400 leaders at U.S. middle market companies and private equity firms.

The survey saw an uptick in would-be sellers and continued interest from prospective buyers. Among PE firms, the majority (54%) say deal flow will increase from 2021’s record levels, while 33% say it will remain the same and 13% say they expect a decrease. In terms of valuations, half of middle-market companies expect stable valuations, while 36% anticipate higher prices. PE firms are even more positive, with 42% saying valuations will remain stable and 40% predicting higher multiples in the year ahead. The survey also found that confidence in getting deals done increased among both sellers and buyers.

“We heard from companies about the challenges they expect will continue into 2022, but they also have a lot of optimism. That confidence is one of the fundamental reasons why the M&A outlook is strong even after the pace of deals in 2021,” said Ralph M. Della Ratta, chairman, Citizens M&A Advisory.

“It speaks volumes that companies and PE firms see this pace continuing. It reflects the confidence level in the market. The pandemic really disrupted the operating environment, and that creates a new value proposition for both sellers and buyers,” added Jim Childs, head of Citizens M&A Advisory.

Companies said COVID and other economic factors such as labor market challenges and commodity prices are headwinds to operations, yet they still see stable, positive performance for the year ahead. For some sectors, COVID and its effects make life much harder, through depressed revenue (gaming & lodging) or steep labor/commodity challenges (transportation & logistics). For others, the pandemic drives sales higher (healthcare, online retail). However, even within sectors this environment is creating winners and losers.

Key findings of the 2022 survey include:

  • Expected selling activity is rebounding with the percentage of companies open to a sale increasing after a COVID-related decrease in the last two years’ surveys. The most common reason to sell is for strategic growth opportunities, but the second most common is lack of a succession plan along with pandemic weariness. Pandemic burnout among Baby Boomer business owners could also be the key driver behind the jump in sellers looking to sell their whole business, which rose to 39% compared to about 24% prior year.
  • In line with other years, six in 10 companies said the majority of their growth would come from acquisitions. Growth remains the top driver for both buyers and sellers coming to market.
  • Interest in international deals among companies continues to decline among both buyers and sellers. However, there was an uptick with more PE firms interested in international opportunities, rising from 44% in 2021 to 55% in 2022.
  • Those who say they have more interest in M&A cite more compelling opportunities to pursue (35%) and an interest in expansion (24%) as main reasons. But those who have less interest in M&A worry about the challenge of finding partners (16%) and the uncertainty of the environment plus a need for more time (15%).
  • Among sellers, there is continued interest in using an advisor for M&A transactions. The main reason they seek out an advisor is to help find potential offers. Among buyers, they see value in the way that advisors speed up the process and help to assess an opportunity.
  • As in prior years, two-thirds of buyers said they prefer to work with a seller who uses an advisor. But there was a big jump in the percentage who say an advisor helps keep negotiations at a professional level (42%, up from 35% in 2021). This may reflect the high-stress environment underlying the current marketplace.

The survey found broad indications that high volumes and strong valuations are poised to carry on in 2022. The worries of the prior year (tax implications and political changes) have faded from the priority list, while the ongoing pandemic is still clearly a big factor both for operations and for bringing buyers and sellers to the marketplace.

Amid these dynamics, low interest rates and strong economic growth continue to support high valuations. The pandemic is the new normal and companies, PE firms, advisors have all adjusted to working under these conditions. Strong performers should be prepared for a seller’s market with a competitive offer process and high valuations.

The survey was conducted among U.S. based middle-market businesses ($50 million to $1 billion in revenue) that are currently engaged in or open to mergers and acquisitions activity, as well as private equity firms with clients in the same revenue range. Core business sectors included healthcare, technology, industrial, consumer services, B2B services and other industries.

Business executives at 265 middle-market firms and 135 PE firms who are directly involved in decision-making related to mergers and acquisitions (owners/partners, CEOs, presidents and other C-level executives and directors) completed a 15-minute phone or web-based survey between November and December 2021.

For more information on this year’s Citizens Middle Market M&A Outlook, please go to

Citizens M&A Advisory specializes in middle-market mergers and acquisitions. Citizens combines sector intelligence with a client-focused approach to realize our clients' true value. The Citizens team has more than 130 M&A professionals specializing in a range of industries across the United States. Citizens M&A Advisory is part of Citizens Capital Markets, Inc., a subsidiary of Citizens Financial Group (NYSE: CFG).

For more information, please go to the Citizens website.

About Citizens Financial Group, Inc.

Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $188.4 billion in assets as of December 31, 2021. Headquartered in Providence, Rhode Island, Citizens offers a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. Citizens helps its customers reach their potential by listening to them and by understanding their needs in order to offer tailored advice, ideas and solutions. In Consumer Banking, Citizens provides an integrated experience that includes mobile and online banking, a 24/7 customer contact center and the convenience of approximately 3,000 ATMs and approximately 940 branches in 11 states in the New England, Mid-Atlantic and Midwest regions. Consumer Banking products and services include a full range of banking, lending, savings, wealth management and small business offerings. In Commercial Banking, Citizens offers a broad complement of financial products and solutions, including lending and leasing, deposit and treasury management services, foreign exchange, interest rate and commodity risk management solutions, as well as loan syndication, corporate finance, merger and acquisition, and debt and equity capital markets capabilities. More information is available at or visit us on Twitter, LinkedIn or Facebook.

This is for informational purposes only and is not a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. This material contains forward looking statements and there can be no guarantee that they will come to pass. Information contained herein is based on data from multiple sources and Citizens makes no representation as to the accuracy or completeness of data from sources outside of Citizens.

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