According to recent media reports, 2021 has been a year for the record books when it comes to mergers and acquisitions (M&A). According to a Refinitiv Deals report, M&A deals increased 158% in 2021 to $2.4 trillion. This is the highest level year-to-date since Refinitiv began tracking M&A deals in 1980.
Investing website intellizence recently commented that, “There seems to be no slowing down of big deals across the industry. The outlook is positive with organizations looking to grow and scale business, while private equity firms and SPACs are ready to invest capital.”
This is certainly true in the automotive aftermarket. AMN published more than 125 reports this year on mergers and acquisitions within the automotive and heavy-duty aftermarkets alone, a majority of them involving private equity firms.
Within the distribution segment, Parts Authority has made significant investments this year, acquiring nine Utah locations from NPW in August, and 15 Parts Plus locations in the New Mexico and Colorado markets this past September. The company also acquired Coney Island Auto Parts in July and West Springfield Auto Parts in May, giving the distribution business an increased footprint across the U.S. Parts Authority gained the financial backing to make these acquisitions when private equity firm Kohlberg & Co. took a majority stake in the business last October.
Data from Jeffries featured in the Auto Care Association’s 2021 Factbook noted that there was heavy M&A activity in the aftermarket in 2020 and 2021 within the service segment, as private equity-backed businesses and publicly traded companies looked to strengthen their national footprints at a time when fleet services and transportation-as-a-service (TaaS) is becoming big business. Among the big players to invest this year and last were Valvoline, Mavis Discount Tire and Driven Brands, the Factbook reported.
Continued growth through acquisition is expected over the next several years. Results of a recent CEO Outlook survey from KPMG re-affirmed these expectations, with 49% of the more than 400 CEOS from large companies who responded stating that they plan to undertake acquisitions that would have “significant impact” on their businesses in the next several years.
