December 22, 2015, NEW YORK – Dealmakers expect mergers and acquisitions in the Consumer Goods and Retail sector to accelerate in the short term, according to the latest reading of SourceMedia’s Mid-Market Pulse (MMP). The 12-month outlook, however, shows that activity will slow down dramatically after the holiday season.
The MMP, published by Mergers & Acquisitions in partnership with RSM US LLP (formerly McGladrey LLP), 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.
The MMP is a diffusion index, and readings above 50 indicate that respondents expect an increase in activity. The 3-month reading for this sector of 74.1 far outpaced the overall M&A composite score of 61.8 for the same period. That shifts in the 12-month forecast, which has registered 60.1 for overall M&A and 54.2 – 20-point drop – for the sector.
Mergers & Acquisitions Editor in Chief Mary Kathleen Flynn says these results indicate slower growth over the next year. “In addition to macroeconomic issues affection the whole dealmaking landscape, such as China’s stalling economy, the retail sector is facing its own set of challenges, including ‘overstoring’ in the age of e-commerce,” Flynn said. “We expect to see more retailers fail after the winter festivities.”
Each month, the MMP index spotlights an individual industry and presents respondents’ expectations for deal activity within that specific sector.
For a complete analysis of the MMP’s most recent data, go toTheMiddleMarket.com/MMP-Retail1215
Inside the MMP
The Mergers & Acquisitions Mid-Market Pulse (MMP) is a monthly barometer of sentiment in the mergers and acquisitions business derived from monthly surveys of approximately 250 executives in private equity firms, investment banks, lenders, and advisory firms in accounting, law, and consulting.
Based on a regular set of recurring questions about expectations and trends across a range of key issues in M&A, the MMP is a leading indicator for potential changes in momentum in M&A activity. Various indicators that make up the MMP include projected deal volumes and pricing, staffing resource utilization levels, and the expected impacts of economic conditions, taxes and regulatory policy on future M&A activity.
Survey responses describe expectations and outlooks for 3- and 12-month forward periods to arrive at indicator scores. Respondents also are asked to elaborate on their responses and provide opinions about other conditions that affect their M&A outlook.
What Respondents are Saying
Survey respondents are encouraged to add verbatim comments to their answers. Many noted concerns about global and domestic economies, citing rising interest rates, stock market volatility and China’s challenges.
“The performance of the U.S. economy will be the most influential factor,” one dealmaker said. “The economy will slow down going into this first quarter of 2016 and that will affect deal volume and value.”
Another cited uncertainty about consumer confidence. “The consumer needs more money in their pocket, whether that comes from wage increases, lower energy costs, tax reform, etc.,” the respondent said.
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. Information about SourceMedia is available atwww.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. With more than 40,000 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 48,305 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.
About RSM US LLP
RSM US LLP is the leading U.S. provider of audit, tax and consulting services focused on the middle market, with more than 8,000 people in 80 offices nationwide. It is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 37,000 people in over 110 countries. RSM uses its deep understanding of the needs and aspirations of clients to help them succeed.
For more information, please contact:
Mary Kathleen Flynn
Executive Director, Marketing