Buy-Side Practice
A VOLATILE START TO 2025
HVA Buy-Side Practice – Start of 2025
M&A Trends & Outlook:
The M&A predictions for Private Equity (PE) and Corporate Development were made obsolete these past few weeks – the consensus outlook is rattled as Q1 deal activity in the US was down 6% yoy while deal value was down 20% yoy with fewer mega deals
Given, the M&A doldrums of the past few years (slowing deal flow, variable quality, few exits, tough fundraising and credit markets) we believe there is building back pressure preventing a reflex “wait & see” response. One Buy-Side client put it this way: “M&A hunters smell opportunity in this chaos. ”
Macro Turmoil:
An industry commentator suggested a new word under consideration at Webster’s –“Tariffied” . An unstable playing field with elevated levels of uncertainty is a tough headwind. Anxiety is highest with supply chain heavy and cyclical models. As for our clients, so far, although a bit headline-distracted, our teams remain on track
The Aftermath from Tariff Episodes in March/April
• Anecdotally, clients are cautious but expect market sentiment to settle.
• The data for April & May will be watched closely – so far, through February, larger M&A transactions ($100M+) were only down slightly (6% yoy), in a seasonally weak month.
Private Equity
2025 Outlook for PE & Corporate Buyers
• “Uncertainty” is now the word for 2025. Tough times for PE – after a tough few years with limited exit traction, lagging fund-raising with increased prevalence of only partially realized returns with the increased use of continuation funds. – Bain
• At the start of 2025, there was the prospect for 10,000 deals and $1.0 Trillion in aggregate transaction value: driven by pressure to exit, better credit markets and more creative deals – Cherry Bekaert
• Positive outlook given technology-powered trends with AI, data-driven decisioning coupled with global scaling and more private credit sources – West Monroe
Corporate Development
• Conflicting forces: Growing desire of Corporates to transform their portfolios through M&A but with higher volatility from “known unknowns” like tariffs and geopolitics – Goldman Sachs
• Pre-Tariffs: Private Equity was more optimistic than Corp Dev, with PE Buyers expecting a 16% rise in M&A vs Corp Dev Buyers expecting only and 8% increase – EY
• For 2025, expect deal momentum with lower rates, investable capital and need for business reinvention amidst shifting regulatory agencies – PWC
Source: Bain; Cherry Bekaert; EY; Goldman Sachs; PWC; S&P Global; Pitchbook; West Monroe
HVA Buy-Side – Active, Diverse & Getting to Close
Our dedicated Buy-Side teams remain busy: We are seeing a new sense of urgency from our clients across the board. Key observations:
• Both PE and Corporate clients are launching new initiatives
• Several firms are engaging a retained buy-side advisor for the first time
• Driven by time to market, competition for targets and making up for lost time
• Clients are bringing us into both Platform and Add-on work with their portfolio leadership
• Notably, on the platform front, clients are bringing our team in earlier, with thesis development and market testing followed by full-scale outreach, pursing both independent targets and sponsor-backed companies
Tariff Impact:
• At start of April, one larger PE client paused 1 of their 2 Buyside engagements
• Supply Chain uncertainty
Buy-Side KPIs suggest a strong year, although macro conditions are in focus: Each Buy-Side engagement tracks outreach, response rates and closings – activity remains elevated:
• Our teams have built experience in over 100 niche markets
• On average our, teams continue to achieve a 30%+ response rates from target outreach
• Prospect pipelines, funnel proportions and deals in diligence suggest an active second half
Time to Market is Driving New Buy-Side Initiatives
Recent Buy-Side closing highlights power of selective outreach and persistence with prospects:
Case Example – Business Services: Revenue Cycle Management – Specialized Claims
• Very specialized niche market serving healthcare providers
• Few scaled providers with strong KPIs in collections, days to pay or automation
• Team identified over 300 targets and achieved a healthy response rate
• Collaborative evaluation with sponsor and portco, leading to a successful offer and close
M&A Spotlight on Two Sectors
Case Study – Global Complexity Solved
NY PE group, with Canadian Portco acquires Swedish Tech Firm
Situation:
Our Private Equity client wanted to expand their portfolio company’s offerings and geographic market presence with a growth-through-acquisition strategy, although they lacked the bandwidth to source and diligence targets. Moreover, the portfolio company’s leadership was skeptical that any new, visible targets could be found in this specialized niche market – particularly outside of North America.
Challenge:
The global grocery technology market was new to the Harbor View team. We needed to collaborate with our client’s team to narrow our funnel, engage with actionable targets and move expeditiously to acquisition proposals. Additionally, our client’s team had limited bandwidth for M&A. Harbor View needed to play a more active role in diligence: managing third parties, organizing internal functions and providing perspective to negotiations where appropriate.
Outcome:
We were able to leverage Harbor View’s Industrial, Consumer and Technology expertise to quickly understand the industry landscape and identify potential targets. We sourced and engaged a uniquely qualified European target, based in Sweden. While the target’s founders were engaged in the combination’s potential, their investors were reluctant and initially held out for a well-above-market premium valuation. As expected, our client’s CEO/CFO took the lead in negotiating with Harbor View playing a facilitator and consular/challenger role in the discussions. Due to client bandwidth constraints, our role expanded from simply sourcing to full execution support through transaction negotiation, structuring, diligence and closing. Despite the target Board’s reluctance and push for a formal sell-side process – the target’s leadership was convinced that the power of this combination outweighed the alternatives. Together, the team overcame the challenge of a three-country transaction to get a successful transaction completed, within valuation expectations, to terms and timing that beat expectations.
Process Milestones
international targets across sustainability, demand forecasting, AI/MI, and traceability domains
In Summary:
Facilitated
and
responses to info requests & remediation
Collaborated with management & legal teams for NWC analysis, funds flow, and contracting
Harbor View was retained by a U.S.-based Private Equity client to help execute a growth-through-acquisition strategy for their Canadian portfolio company that operates in the GroceryTech/fresh food inventory management & sustainability space. Food waste management is an emerging and highly fragmented industry undergoing unpredictable regulatory shifts & innovations.
HVA Buy-Side - Practice Overview
Our dedicated buy-side practice begins with a listen-first approach to establish objectives, create a market map, prioritize acquisition targets, and launch an initiative that results in high-impact outcomes
AVG RESPONSE RATE Platform Search
Add-On Search
AVG RESPONSE RATE
INTRO CALL TO MEETING CONVERSION
INTRO CALL TO MEETING CONVERSION
Key Take Aways:
• Collaboration with our PE teams & their portfolio company leadership is the key to success
• There is no substitute for thorough research and market mapping
• Founders relate better to outreach from more senior bankers
Select HVA Buy-Side Engagements – Niche Markets
WEALTH & ASSET MANAGEMENT
INSURANCE ANALYTICS
ANNUITIES BROKERAGE
MORTGAGE SERVICES
SPECIALTY FINANCE
REVENUE CYCLE MANAGEMENT
INDUSTRIAL AUTOMATION
ENVIRONMENTAL SERVICES
ENVIRONMENTAL ENGINEERING
WASTE WATER / WASTE HAULING
JANITORIAL SERVICES
FOOD EQUIPMENT DISTRIBUTION
MANAGEMENT CONSULTING
OUTSOURCED HR / PEO
STAFFING
OUTSOURCED S&M
MEDICAL BILLING
CLINICAL RESEARCH
DIGITAL TRANSFORMATION
SAP CONSULTING DAAS
POS HARDWARE REPAIR / SERVICES
CYBER SECURITY MANAGED SERVICE PROVIDER SUPPLY
LMS / EMPLOYEE ENGAGEMENT
E-COMMERCE
B2B DISTRIBUTION BRANDED SNACKING
About Harbor View Advisors
The material in this report is for information purposes only and is not intended to be relied upon as financial, accounting, tax, legal or other professional advice. This report does not constitute and should not be construed as soliciting or offering any investment or other transaction, identifying securities for you to purchase or offer to purchase, or recommending the acquisition or disposition of any investment. Harbor View Advisors does not guarantee the accuracy or reliability of any data provided from third party resources. Although we endeavor to provide accurate information from third party sources, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future.