ACG Winter Summit 2021: Looking Ahead
Investment opportunities in emerging technologies, the M&A deal environment and the return to work were the session topics of the virtual ACG Winter Summit held in January.
This article originally appeared in the Winter 2021 issue of Middle Market Growth. Find it in the MMG archive.
Investment opportunities in emerging technologies, the M&A deal environment and the return to work were the session topics of the virtual ACG Winter Summit held in January. Although panelists said that the global pandemic had a profound impact on business and client interactions, they all closed deals in 2020 and are looking forward to the year ahead.
Two things that are shocking about 2020: the world continued on with our normal business lives, and it’s remarkable how quickly the globe mobilized and produced vaccines.
Gretchen Perkins
Partner, Avance Investment Management
“Two things that are shocking about 2020: The world continued on with our normal business lives, and it’s remarkable how quickly the globe mobilized and produced vaccines,” said Gretchen Perkins, partner at private equity firm Avance Investment Management and the moderator of the “M&A Outlook: 2021 Deal Trends” panel that was sponsored by Datasite.
“2020 was certainly an interesting year and, surprisingly, we ended up doing more deals in 2020 than we ever have as a firm,” says Greg Treger, co-founder and managing director of Clearsight Advisors, an investment bank focused on business services and tech-enabled services companies.
Kevin Manning, managing director and head of industrials at Stout, added that while this year started out light in terms of deals, he expects M&A activity to accelerate, thanks in part to tax increases that the new Biden administration is expected to implement next year. “We think it’s going to be a very active year and a good year for a lot of us,” he said.
Business travel and in-person meetings will return, but if a business owner wishes to conduct meetings over Zoom, then virtual visits will continue, said Treger. “If our prospective client wants us there, we’re going to be there. Most of our clients we’ve signed up over the last six months, we’ve never met face to face.”
Meeting over Zoom has its benefits for companies considering a sale. For one, it cuts down on concern and speculation among employees. “You don’t have leadership teams gone for a week and [workers asking] what’s going on with the CEO and CFO,” said Steven Moon, managing director and deputy head of M&A for Duff & Phelps Securities.
Emerging Niches
Although telemedicine was gaining ground before the lockdowns, the global pandemic set virtual physician visits off and running. Panelists on the “Emerging Opportunities in Virtual Care” panel, sponsored by Sapling Financial Consultants, predicted that businesses that enable virtual care will see consolidation.
Telehealth is convenient and there is “some pent-up demand to people in rural areas,” but looser regulations and lower costs could spur mergers in the coming decade, said Rob Hong, co-founder and CEO of Sapling Financial Consultants.
That said, telemedicine is still maturing and expanding beyond general medicine and into medical specialties and after care. “The question that the middle-market PE groups need to ask themselves is, how can we apply virtual care?” said Bret Larsen, virtual care strategist, CEO and co-founder of eVisit, a virtual care platform.
Another niche industry that’s attracted investor attention is additive manufacturing, the suite of technologies that includes 3D printing. During the “Emerging Opportunities in 3D Printing” panel, Andrew Rush, president and COO of Redwire, a space manufacturing company, said 3D printing will see a growing presence not only in aerospace, but also in medical and dental applications, and even jewelry-making.
“We’re entering that era where we recognize that additive manufacturing is an amazing tool that enables us to make limited production runs in a cost-effective way,” Rush said.
Chatbots is a third sector that appears to be ripe for investment, particularly as health care entities adopt the interactive AI technology. Michael Lamm, a managing partner at investment bank Corporate Advisory Solutions, sees chatbot applications being used to bolster medical revenue cycle management, bill coding and collection.
“The market’s really evolving and health care has been slow to move on everything, but I think due to COVID and the evolution of telehealth, it’s been a big movement for automation,” Lamm said during the “Emerging Opportunities in Chatbots” session, sponsored by SAP Software Solutions.
An increasing number of companies are looking to scale, and AI-powered chatbots could be the building block of this expansion. “If I look at the companies that we work with, they don’t want to be small and medium businesses. They want to be the next big company,” said Greg Petraetis, a senior vice president and general manager at SAP North America.
The Future of Work
The Summit’s panelists expect many middle-market businesses to change hands throughout 2021, but where will their employees be working? That answer hinges on whether the COVID-19 vaccines are effective, and if workers feel confident to return to the office, said Insperity CEO and Chairman Paul Sarvadi during a oneon- one discussion with ACG CEO Tom Bohn.
Insperity, which sponsored “The Future of Work” session, is an Official Sponsor of Growth with ACG, the association’s highest sponsorship category. Last summer, ACG named Insperity an endorsed partner.
We’re entering that era where we recognize that additive manufacturing is an amazing tool that enables us to make limited production runs in a cost-effective way.
Andrew Rush
President and Coo, Redwire
According to Sarvadi, companies have to make the workplace more attractive for returning employees. “I believe we’re going to have a competition of corporate culture,” he said. “The companies with the best corporate culture were able to transition to work-from-home the easiest. They were able to maintain their effectiveness because culture was ingrained, and people knew what to do.”
Even with a successful vaccine rollout, Savardi foresees remote work continuing, but to a lesser degree. “We reached out to our corporate staff and said, help us figure out the optimal mix of how much time per day where you get the culture and innovation and collaboration,” he said. “But you also get some of the advantages and conveniences of work-from-home and family life.”
Savardi asked, “How do we find that happy medium?”
Phil Albinus is Middle Market Growth’s managing editor.
Benjamin Glick is Middle Market Growth’s associate editor.
