November 12, 2014 NEW YORK – Momentum returned to early-stage deal flow in October, according to SourceMedia’s Mergers & Acquisitions Conditions Index (MACI). A large number of conferences around the world provided networking opportunities for dealmakers, helping to push the October composite score to 59.5 from the September reading of 53.8.
The M&A Conditions Index (MACI) is a barometer to gauge mid-market mergers and acquisitions activity. The MACI is powered by surveys of Mergers & Acquisitions’ company’s unique and qualified professional audiences in private equity, corporations, investment banking, law firms and other M&A advisory areas. The October reading was based on a survey of more than 250 dealmakers. For a complete analysis of the MACI’s most recent data, visit: http://www.themiddlemarket.com/MACI_October
“The high rate of growth in the middle-market M&A seen in the spring resumed in October, with dealmakers reporting significant acceleration in activity,” said Mary Kathleen Flynn, Editor-in-Chief of SourceMedia’s Mergers & Acquisitions publication.
The score gives October the highest reading since April, according to Flynn. Key components had an impact on the overall index, including Leads, which hit 73.2 compared to the previous month’s 62.2.
“October bursts with conferences and other networking opportunities for dealmakers and plays a pivotal role in M&A,” Flynn said. She added historical comparison from 2013 when October and December each delivered 260 deals, making them the year’s most fruitful months for middle-market M&A.
Inside the MACI
The MACI is a diffusion index. Readings above 50 indicate an expansion in M&A activity and readings below 50 indicate a contraction. The further from 50 a reading is, the stronger the indicated change.
Monthly readings are presented as a time series that can be used to monitor the prevailing rate and direction of change in M&A activity and eventually to benchmark whether an institution is operating in line with overall industry trends.
The index was created by SourceMedia Research in collaboration with the editors of Mergers & Acquisitions. In addition to the M&A Conditions Index, SourceMedia publishes indices for banking, mobile banking, accounting and other key sectors.
The M&A Conditions Index is a composite of multiple business metrics within its sector, measured through monthly surveys of executives in relevant markets. It is constructed to reveal and track patterns that enable professionals to better understand and anticipate peaks and troughs in their core activities. The MACI comprises a number of select sub- indicators that summarize various M&A activities, including deals shown, letters of intent, acquisitions and divestitures.
A Look at the Numbers
October’s composite score of 59.9 was a jump from September’s 53.8. Most components joined Leads (73.2) in expansion. For instance, Signed Letters increased to 67.3 in October, up from 53.8 in September, and Completed Deals hit 57.7 compared to the previous month’s 48.4.
Bidders, a contrary indicator, dropped to 61.2 in October from September’s 62.5. Flynn said “this indicates a healthier M&A market.”
What Respondents are Saying
Survey respondents are encouraged to add verbatim comments to their answers. Respondents said the mid-term elections, which happened after the survey concluded, would impact M&A activity going forward. “The mid-term elections will play significant role in the short-term feeling in the economy,” a dealmaker said.
The current economic environment was definitely top of mind for dealmakers. “The perception that the economy is improving, but may not hold is driving sellers to market right now,” one respondent commented. Another noted: “The capital markets are flush right now and it will likely change a year from now.”
SourceMedia, an Observer Capital company, is a diversified business-to-business digital media company serving senior professionals in the financial, technology, and healthcare sectors. Brands include American Banker, The Bond Buyer, Mergers & Acquisitions, Financial Planning, On Wall Street,AccountingToday,HealthDataManagement,andEmployeeBenefitNews. Information about SourceMedia is available at www.sourcemedia.com.
About SourceMedia Research
SourceMedia Research, a unit of SourceMedia, provides research solutions for marketers, agencies and others targeting business sectors such as banking, payments, mortgage, accounting, insurance, employee benefits and investment advisor / wealth management. SourceMedia Research specializes in reaching senior and C-level decision makers through access to its large proprietary opt-in databases and panels.
About Mergers & Acquisitions
Mergers & Acquisitions covers all aspects of middle-market dealmaking, including identifying acquisition targets, negotiating transactions, performing due diligence, and closing deals. Serving nearly 18,600 print subscribers, our monthly magazine is published in partnership with the Association for Corporate Growth (ACG), a global organization comprised of thousands of private equity firms, corporate officials and intermediaries. With more than 25,000 unique monthly visitors, themiddlemarket.com is continuously updated, providing real-time information and analysis of news and trends in M&A. Our online video series features interviews with high-profile dealmakers, including private equity partners, strategic buyers, investment bankers and other advisers.
For more information, please contact:
Mary Kathleen Flynn