M&A activities of SMEs: record number of transactions

After a turbulent period for Swiss SMEs in 2020, Switzerland has seen a historic surge in M&A activity in the first half of 2021. This is the finding of the current Deloitte study on the M&A activities of Swiss SMEs. A total of 117 transactions were executed in the first half of 2021 - the highest number of transactions since the start of this study series in 2013 and at the same time a record increase of 62.5 % compared to the previous year. In particular, acquisitions of Swiss SMEs by foreign companies increased by 88 % and acquisitions by Swiss SMEs abroad doubled. This upturn in cross-border activity (67.5 % of transactions) reflects renewed confidence in the general economic outlook. Growth in domestic transactions was less significant (+23 %).

M&A activities by Swiss SMEs mainly in Europe

Europe is the main market for acquisitions by Swiss SMEs, as this region accounts for 84 % of transactions. Neighboring countries account for 50 % of acquisitions and Germany remains the largest market for Swiss SMEs with a share of 28 %. The TMT industry and healthcare, which are among the winners of the COVID 19 crisis, are among the most sought-after sectors.

Zurich is at the top

Germany was the largest investor in Switzerland in the first half of 2021. In general, the main buyers of Swiss SMEs were also Europeans (81 %), followed by predominantly North American and Asian companies. The consumer goods industry, one of the main beneficiaries of the economic recovery, has overtaken the industrial and TMT sectors, which usually top the ranking of the most desirable Swiss SMEs. Acquisitions were mainly made in German-speaking Switzerland (81 %), with the canton of Zurich being the region with the most dynamic M&A activity (23 transactions). "After a decline in foreign investment in 2020, it is reassuring to see that Switzerland is again attracting more external buyers," says Stephan Brücher, Partner for Corporate Finance Advisory at Deloitte Switzerland.

Fourth pandemic wave could hamper recovery

M&A activity in the first half of 2021 was driven by the prospect of a historically strong economic recovery. "Depending on how the pandemic situation evolves and the pace of vaccination campaigns, historic gains from the first half of 2021 may be sustained. M&A activity is expected to remain dynamic over the next six months, supported by a backlog of deals and strong market fundamentals in key markets," explains Stephan Brücher. "However, the risk of a fourth wave is growing with the rapid spread of the delta variant. This could make the economic recovery more uncertain and have a negative impact on markets and corporate appetite for transactions."

Source: Deloitte