June 30, 2016, NEW YORK – Transaction professionals anticipate that uncertainty, caused primarily by the upcoming U.S. elections, will continue to put a damper on M&A activity for some time, according to the latest readings of SourceMedia’s Mergers & Acquisitions Conditions Index (MACI) and Mid-Market Pulse (MMP). The MACI’s overall composite score hit 48.7, landing it in contraction territory compared with April’s reading of 52.
“Professionals in the business do not see a rebound anytime soon,” said Mary Kathleen Flynn, Editor-in-Chief of SourceMedia’s Mergers & Acquisitions publication. “The index was dragged down primarily by a sharp contraction in the component that tracks divestitures, as a burst of deals by companies to jettison non-core business lines ended.”
In the MMP, M&A professionals specializing in consumer goods and retail provided a rare source of optimism about the near-term outlook, which scored 74.1. The finance, insurance, and real estate (FIRE) sector turned up a particularly glum 3-month outlook reading of 30.6.
The MACI and MMP are diffusion indices. 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.
SourceMedia Research in collaboration with the editors of Mergers & Acquisitions created the MACI and MMP as barometers to gauge mid-market mergers and acquisitions activity. They are powered by surveys of Mergers & Acquisitions’ audience of unique and qualified professionals in private equity, corporations, investment banking, law firms and other M&A advisory areas. For a complete analysis of the most recent data, visit:http://www.themiddlemarket.com/news/financial_services/m-260837-1.html.
The MACI is a composite of multiple business metrics within its sector, measured through monthly surveys of approximately 250 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.
The MMP is a forward-looking sentiment indicator that monitors M&A professionals’ expectations for merger and acquisition activity within the middle market over the coming 3- and 12-month periods.
Divestitures, which registered 42.3 in the May MACI reading, contracted from April’s score of 56.5, significantly impacting the composite score.
Leads remained in expansion territory with an MACI reading of 57.1, suggesting that the current downturn may be more about ability to execute deals than to find them.
Financing remains a source of strain as it once again registered in contraction territory.
Consumer goods and retail sector is tremendously bullish in the near-term forecast at 74.1 but less so over the long-term at 50.5.
FIRE sector contracts in the near-term (30.6) but heads to expansion (55.3) in the 12-month forecast.
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, Accounting Today, Health Data Management, and Employee Benefit News.
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. With more than 50,000 unique monthly visitors, the brand’s website at themiddlemarket.com is continuously updated, providing real-time information and analysis of news and trends in M&A. Its monthly magazine, which serves over 20,000 subscribers, 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. Mergers & Acquisitions’ 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
Senior Manager, Marketing & Strategy