There were 821 middle market automotive M&A transactions in 2021, a 38% increase from 2020. Automotive M&A activity in Q4 2021 represented the highest quarterly total in the Stout database in a 4-year period, with 249 automotive transactions in Q4 2021 — up 18% from Q4 2020.

Positive momentum continues into 2022, which is expected to be another strong year for M&A activity. There continues to be strong demand from both strategic and financial buyers despite the continuation of COVID-19 conditions and lingering supply chain constraints. Whether an automotive supplier finds itself in a healthy or challenged post-COVID environment, M&A and restructuring activity over the next 24 months could be imperative in positioning suppliers for longer-term success.

KEY THEMES & MACRO TRENDS

• 5-year-high levels of M&A activity in 2021 by volume, and record levels of M&A by deal value
• The global shipping container shortage continues to stifle the supply chain
• Positive momentum heading into 2022 with strong buyer demand and access to capital
• Improved company performance in many automotive sectors, despite increasing commodity costs and operational challenges
• Supply chain disruptions and shortages of semiconductor chips are not expected to be resolved in 2022, while demand for cars continues to increase
• M&A is expected to be both a catalyst and opportunity for organizations to right-size operations to meet new market demands of a post-pandemic and continuously evolving automotive sector