Market Commentary

Published on: 02/17/2015
In our last newsletter, we noted that M&A data had finally caught up with the market swell based on the deal volume we were experiencing. We also predicted that activity levels we were seeing in Q4 would trump 2013 and expected the year to finish at near-record levels. That proved true to form and, while the 2012 record was not broken, activity pushed the ceiling. More importantly, perhaps, is the fact that we are seeing an acceleration in the market with improved dynamics.
Published on: 12/01/2014
In quarters past, we have been reporting on increased M&A activity in the middle market, noting a sharp rise in new companies preparing to enter the market and deals moving closer to closing. Despite the growing backlog of transactions within our own firm and deal makers across the industry generally feeling like the market was roaring, formal statistics about deal volume and closings seemed to be lagging the activity. Well, that is no longer the case. Moreover, deal closing activity in Q4 – though still a bit early to say – appears to be dwarfing 2013 levels.
Published on: 08/21/2014
The recent stock market correction drew everyone’s attention. But within a prolonged bull market run, M&A deal makers took the public market blip in stride. Putting things in perspective, we have experienced over 1,000 days since the last correction (i.e., a drop of 10%+). In that context, this was an expected speed bump – and probably overdue. Regardless, the fluctuation in public equities has had no bearing on the M&A market. We continue to experience a robust environment with deal volume up 11% in the first half of 2014.
Published on: 05/22/2014
During the prolonged recession, business owners, individual investors and dealmakers alike became accustomed to a continuous pounding. Surges of recovery were too frequently followed by significant negative economic and political developments, leaving most people constantly looking over their shoulders. The hyper-critical (some would argue cynical) sentiment made it virtually impossible to acknowledge the mounting positive developments and forward momentum occurring. It was almost as if we would not allow ourselves to be happy, or otherwise commit to buying-in to the stabilization.
Published on: 02/27/2014
Everyone involved in the middle market deal business is well aware of downward statistical trends from 2012 to 2013. Deal makers can easily recall a year (2013) that failed at several points to gain the expected momentum. The charts tell the “rear view mirror” story, but to understand the pulse of the current M&A market, you need to read between the lines. Throw out the 2012 record breaking year and the monstrous Q4 ’12 as business owners sprinted to the finish line to beat the looming changes in the capital gains tax rate. That’s history; it’s old news.
Published on: 08/21/2013
The M&A environment improved slightly in Q2 2013 from the previous quarter after record-breaking deal activity in 2012. The increase in Q4 2012 and subsequent decrease in Q1 2013 were expected, as buyers and sellers worked to finalize transactions before the capital gains tax rate increase. Transaction volume should continue to accelerate in 2013 as strategic acquirers and private equity firms focus on new investments, as evidenced by an increase in deal activity of 3.4% from Q1 2013 to Q2 2013.
Published on: 02/22/2013
2012 is being perceived as a “moderate” year for mergers and acquisitions, with experts citing a lack of highly publicized megadeals. But from our standpoint, firmly entrenched in the U.S. middle market, 2012 was a solid year. Statistics show that the number of transactions valued under $250 million rose 4% in 2012, with over 14,000 announced deals totaling $167 billion in aggregate value. This growth was fueled by healthy balance sheets among strategic suitors, cash rich private equity buyers, and a favorable lending environment.
Published on: 09/25/2012
Today’s headline story in private equity remains the massive capital overhang – or dry powder as we like to call it – that private equity groups have available for investment purposes. Following record fundraising years in 2006, 2007 and 2008, the overhang, which is the gap between funds raised and equity invested, widened. Although they have been chipping away at the reserve for several years now, private equity firms still have more than $432 billion to invest, and they are actively seeking quality targets for these funds.
Published on: 06/30/2012
If there is one issue that has permeated Congressional agendas, protester rallies, and presidential debates alike, it is the argument over the appropriate level of taxes for wealthy individuals. With budget deficits looming and “average Americans” continuing to struggle in a tepid economy, the growing sentiment certainly appears to favor tax hikes on the wealthy.

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