M&A activity of Swiss SMEs

M&A activity of Swiss SMEs rebounds in 2021 and reaches a record number of transactions

M&A activity of Swiss SMEs breaks all records in 2021 - renewed confidence in the market

While M&A activity in 2020 was restricted by the spread of COVID-19, in 2021 the market globally experienced a sharp rebound and achieved record-breaking levels, driven by pent-up demand from 2020 and dynamic growth in the world economy. As a result, the global M&A market hit an all-time record, exceeding $5 trillion for the first time – a +64% jump in value compared to 2020 (and +24% in the number of transactions). The same scenario unfolded in the Swiss market, with the number of transactions in which Swiss SMEs were either the buyer or the target increasing to 233, +25% compared to 2020.

This uptrend is reflected in the latest Deloitte CFO Survey published in autumn 2021, which found that in the opinion of Swiss CFOs their country’s economic recovery remains on track: 83% rated the general economic outlook over the next 12 months as positive – the third-highest rating since the CFO Survey was first conducted in 2009. Expectations for most corporate indicators have also improved, with 69% of CFOs rating as positive the financial outlook for their own company over the next 12 months. 60% reported that revenues had recovered to at least pre-crisis levels and 72% expected an increase in sales over the next 12 months, although lower operating margins.

The recovery is expected to pick up speed in 2022 and we predict buoyant M&A activity

Record-high 2021 activity and confidence levels of Swiss companies - placed in the context of a pandemic - send encouraging signals for the economic outlook and the current strength of the M&A market. The recovery is expected to pick up speed in 2022 and we predict buoyant M&A activity. This dynamism is nevertheless subject to the risk of new variants of coronavirus emerging (for example, as at the end of 2021) as well as interest rates hikes from central banks.

Highlights

Evolution in the number of transactions since 2013

M&A activity involving Swiss SMEs reached record-breaking levels in 2021, with 233 transactions – a 24.6% jump from 2020 and exceeding pre-pandemic volumes (196 transactions in 2019)

Transactions in Switzerland

Swiss SMEs are highly coveted by both local and international investors. Transactions increased by 23% from 2020 to a near all-time high of 173 acquisitions

Outbound transactions

The number rebounded to highest levels historically, with 60 transactions (+30% compared to 2020)

Private Equity: Shattering all-time records

M&A activity (sales and acquisitions) involving private equity shattered all-time records with 94 transactions in 2021 (up 13% from 2020) amounting to 40% of all deals

2022 outlook

2021 will go down in history both globally and for Switzerland as a record year for M&A and a strong rebound from 2020. Deal flow shows no signs of slowing down; and bolstered by the prospect of strong economic growth, deal-making could continue at the same pace in 2022, or even faster. The abundance of capital, cheap financing and sky-high valuations are all factors that should fuel deal-making. The TMT and healthcare sectors led the way in 2021 and are sectors to watch in 2022 as they continue to ride the wave of new technology adoption. Valuations peaked at historical levels in 2021 and could stay at high levels, with a strong competition for quality assets.

The upsurge in the omicron variant however demonstrates the fragility of the global recovery; and headwinds such as the threat of inflation and rising interest rates, if they occur, could derail transactions both from a seller and a buyer standpoint. Yet higher interest on its own might not be sufficient to halt the appetite for M&A activity, but rather the impact on valuations of businesses could be significant. Another key issue is the global public health situation and continuing government restrictions on society and the economy that could have a significant impact on deal making both locally and globally. The intensity of the M&A market could also depend on interventions by governments and central banks in sustaining the economy and the capital markets, as well as on geopolitical risks in certain parts of the world.

Download the report

Deloitte 2022 survey on M&A activity in the Swiss SME sector

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Contacts

Jean-François Lagassé

Financial Services Industry Leader

Anthony West

Head Corporate Finance

Konstantin von Radowitz

Managing Partner, Financial Advisory

Jules Boudrand

Director

About the report

This is the 16th edition of our study covering the M&A activity of small and medium-sized enterprises (SMEs) in Switzerland. It identifies transactions involving Swiss SMEs on the basis of various sources of information: the Deloitte database, Mergermarket and the Swiss business press. The transactions have been analysed over a period from 1 January 2021 to 31 December 2021.