Online M&A platform Axial anticipates approximately 6,500 M&A transactions will be facilitated through its private platform linking buyers and sellers this year, and a review of the data collected from those interactions gives a granular view of trends. “Dealmakers are confident in underwriting risk in a full array [of sectors],” says Axial CEO Peter Lehrman. “In the first and second quarter of 2020, if you weren’t an e-commerce or healthcare firm, you didn’t have a viable exit horizon. And the market has just opened.”
Axial tracks sale processes by milestone and number of bidders, allowing it to aggregate sector-wide data on targets from letter of intent through merger announcement in a metric the company styles a “pursuit rate.” The pursuit rate provides additional insight into dealflow given its focus on discrete sale process milestones—ongoing sales are factored into Axial’s market view in real-time, rather than being reflected in backward looking datasets populated only if deals close.
So what novel insights can the metric provide about today’s M&A marketplace? Technology, industrials and real estate generate particular interest on the platform, Lehrman says. Technology’s share of dealflow has risen since Lehrman founded in the company in 2009 as private equity has awakened to the industry’s durable profits.
“There are a lot of small and medium sized software businesses with incredible positions in the market,” he says, “Potentially just as durable in terms of profit and relationships with customers as other industries that they’ve invested in for decades. Tech keeps growing as interest in lower middle market.”
The sector, alongside industrials, has grabbed headlines as deal volumes continue to surge, but the middle market is also seeing a rise in commercial and residential real estate deals.
In particular demand are “businesses that are capable of potentially transforming large amounts of commercial real estate, repurposing for new activity, businesses that reconfigure warehouses for segmented delivery to serve different tenants and customers—a lot of services that go into the trend lines of needing logistics and warehouse capacity to meet that growth in demand,” Lehrman says.