Capstone Headwaters Reports: Value-Added Distribution Services Drive Outperformance

February 19, 2021

Boston, MA – Capstone Headwaters released its February 2021 Value-Added Distribution Update today, reporting that merger & acquisition (M&A) activity rebounded in the second half of 2020, rising 207% quarter-over-quarter (QoQ) in Q3 and 15% QoQ in Q4. The COVID-19 pandemic drove a sharp decline in deal activity in Q2 as strategic buyers largely placed acquisitions on hold as they assessed internal liquidity positions, supply chains, and operational risks.  Meanwhile, private equity (PE) firms swiftly shifted focus from new investment opportunities to portfolio-level liquidity and operational risks. 

“2020 was an anomaly in many ways, and COVID certainly had an impact on deal making in Q2 and Q3.  The good news is Q4 saw some real resiliency and likewise the continued economic recovery bodes well for 2021 activity.  We expect both strategic and private equity buyers to re-engage throughout the course of 2021,” said Todd McMahon, Head of Investment Banking at Capstone and lead contributor to the report.

Despite the sharp slowdown in 2020 deal volume, 2021 presents favorable tailwinds as the economic recovery continues. Strategic buyers, accounting for 58% of total deal activity, have displayed increasing appetite to resume M&A initiatives to bolster geographic reach and value-added distribution capabilities. PE firms accounted for 42% of deal activity in 2020, largely consisting of add-on transactions to stimulate inorganic growth in portfolio companies.

To access the full Value-Added Distribution report, click here


Capstone Headwaters is one of the largest and most active independent investment banking firms in the United States.  The firm has a rich, 20-year history of achieving extraordinary results for middle market entrepreneurs, business owners, investors, and creditors.  Capstone offers a fully integrated suite of corporate finance services, including M&A, debt and equity placement, corporate restructuring, valuation and fairness opinions, financial advisory, and ESOP advisory services.  Headquartered in Boston, the firm has 175+ professionals across 17 offices in the U.S., with an international presence including over 450 professionals in 40 countries. With 16 dedicated industry groups, the firm delivers sector-specific expertise through large, cross-functional teams on a global basis.  For more information, visit

For More Information Contact the Key Report Contributors:

Todd McMahon
Head of Investment Banking