With the lowest reading in six months, January’s deal flow raises questions about the previously upbeat outlook for 2015, according to SourceMedia’s Mergers & Acquisitions Conditions Index (MACI). M&A pros polled last month reported a slow start to the year, despite a blockbuster 2014.“The first month of the new year often suffers by comparison with the last month of the old year,” said Mary Kathleen Flynn, Editor-in-Chief of SourceMedia’s Mergers & Acquisitions publication. “But the fact that January marks the third month in a row that the MACI composite score has declined raises some doubts about the rosy forecast for 2015.”
The MACI composite score registered 52 in January, a dip from December’s 54.5 reading. Early-stage components Leads and Signed Letters also were lower, registering 48 and 51.5 respectively.
“Nevertheless, in our most recently monthly poll, transaction pros still are very bullish on M&A for the year,” Flynn said.
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’ audience of unique and qualified professionals in private equity, corporations, investment banking, law firms and other M&A advisory areas. The December 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/news/financial_sponsors/january-deal-flow-hit-lowest-point-in-six-months-say-survey-respondents-254597-1.html.
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.
What Respondents are Saying
Survey respondents are encouraged to add verbatim comments to their answers. Dealmakers pointed to many factors at play in their outlook, including tax rates, oil prices, global upheaval, and economic stability.
“With the lower fuel prices, the energy deals will come to a halt. Other deals will be affected somewhat, as the energy sector suffers greatly,” one respondent said.
Other dealmakers seem enthusiastic about 2015.
“We expect 2015 will be a year of enhanced activity and deal closings for us,” a respondent said. Another commented: “Improving general economic conditions will continue to create a positive outlook on activity as well as valuations.”
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 athttp://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
Executive Director of Marketing