M&A activity of Swiss SMEs: Spectacular recovery in 2021 – record number of transactions reflects renewed confidence

After a rocky period for M&A activity among Swiss SMEs in 2020, there was a historic rise in the number of transactions in the first half of 2021. A total of 117 transactions were undertaken in H1 2021, the highest number since the Deloitte study on SMEs’ M&A activity began in 2013, and a record increase of 62.5% compared to the same period last year. In particular, inbound transactions jumped by 88% and outbound transactions doubled. This upturn in cross-border activity (67.5% of transactions) reflects the renewed confidence in the overall economic outlook. Although the increase in domestic transactions was less (+23%), this compares well with the previous year, when transaction volume was unchanged between H1 2020 and H1 2019.

Outbound transactions mostly in Europe

84% of outbound acquisitions by Swiss SMEs were in Europe and 50% were in neighbouring countries. Germany remains the number one destination, with a 28% share of the total. Many were in the TMT and healthcare sectors, which have been winners from the COVID-19 crisis.

Inbound transactions - Zurich comes out on top

Germany was the largest investor in Switzerland in H1 2021. In general, the main buyers of Swiss SMEs were European (81%) followed by North American and Asian companies. Acquisitions in the consumer goods industry, one of the main beneficiaries of the economic recovery, exceeded those in the industrial and TMT sectors which tend to top the rankings as the most sought-after Swiss SMEs. Acquisitions were primarily in the German-speaking part of Switzerland (81%), with the largest number in the canton of Zurich (23 transactions). “After a decrease in foreign investments in 2020, it is reassuring to see that Switzerland once again attracts more external buyers”, comments Jean-François Lagassé, Financial Advisory Partner and Financial Services Industry Leader at Deloitte Switzerland.

Fourth pandemic wave may hamper recovery

M&A activity in H1 2021 was bolstered by the prospect of a historically strong economic recovery. “Depending on how the pandemic situation develops and how fast the vaccination campaigns can move along, the historic gains from the first half of 2021 can be upheld. M&A activity should remain vibrant over the next half year supported by a backlog of transactions and strong market fundamentals in major countries”, explains Jean-François Lagassé. “However, the threat of a fourth wave is growing with the rapid spread of the Delta variant. This could make the economic recovery more uncertain and negatively impact the markets and companies’ appetite for transactions.”

About the study
Deloitte's bi-annual study on M&A activity in the Swiss SME sector examines the mergers and acquisitions carried out or targeted by small and medium-sized Swiss companies from 1 January to 30 June 2021. Deloitte defines SMEs as follows: a turnover of more than CHF 10 million, fewer than 250 employees and an enterprise value between CHF 5 million and 500 million.