SourceMedia’s Mergers & Acquisitions Conditions Index (MACI) hit a milestone with its April composite reading of 61.3, which shows that deal flow expanded at its fastest rate in six months.
The M&A Conditions Index (MACI) is a barometer to gauge mid-market mergers and acquisitions activity. The MACI is powered by surveys of the company’s unique and qualified professional audiences in private equity, corporations, investment banking, law firms and other M&A advisory areas. The April reading was based on a survey of 254 dealmakers. For a complete analysis of the MACI’s most recent data, visitTheMiddleMarket.com/MACI_April
“The April composite score of 61.3 indicates the greatest month-to-month increase in overall deal flow in six months of surveys, lending support to the optimism that transaction professionals have expressed in our surveys about M&A in 2014,” said Mary Kathleen Flynn, editor in chief of SourceMedia’s Mergers & Acquisitions publication.
Completed Deals, which rose to 59.2 from 58.1, was among the factors that had the largest impact and experienced its greatest month-over-month score in six months.
Other contributors were early-stage indicators, including Leads with a reading of 79.2 and Signed Letters (of Engagement and Intent) with a reading of 72.8.
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
The April composite score of 61.3 was an increase from March’s 60.1, a speedup in the deal flow expansion rate.
The April score of 59.2 for Completed Deals represents the highest rate of expansion for the component in six months. “This suggests the seasonal dip in closed transactions that typically occurs at the beginning of the new year may be over,” Flynn said.
Leads, which registered 79.2, held fairly steady from the previous month’s reading of 79.7. “Early-stage deal flow expanded significantly in the first quarter, as dealmakers reported seeing new Leads,” Flynn said.
The Bidders component demonstrates “a strong negative correlation to Signed Letters,” according to Flynn. In April, the number of Bidders rose to 31.7, slightly higher than the previous month, when it was 27.8.
“Fewer bidders per deal indicates a healthier M&A market which is why this component is calculated as a contrary indicator in the composite,” Flynn added.
What Respondents are Saying
Survey respondents are encouraged to add verbatim comments to their answers. Many noted their optimism in previous surveys was well founded as they closed more deals in April than they did in March.
One dealmaker noted “pent-up demand and continued marketing” as reasons for more deals. Another said, “I believe economic recovery momentum will kick in as 2014 continues, influencing a better 2015.”
Others were more measured in their responses. “I see a steady but low increase in the market over the next three to 12 months. We are not projecting any radical shifts,” the dealmaker said.
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.
About SourceMedia Research
SourceMedia Research, a unit of SourceMedia, provides full custom B-to-B research solutions for marketers, agencies and others targeting business sectors such as banking, payments, mortgage, accounting, insurance, HR/employee benefits and investment advisor / wealth management. SourceMedia Research can effectively reach upper-level / C-suite business decision makers and technology decision makers through access to its large proprietary opt-in databases and research panels. Experienced research staff, subject matter experts, and dedicated client managers provide customer-focused quantitative and qualitative research solutions and market insights to support strategic and tactical decision-making, product development, demand analysis, thought leadership and market positioning programs. Using the findings, SourceMedia’s Marketing Solutions Group can produce white papers, web seminars, eBooks, videos and other custom assets to meet clients’ business needs.
SourceMedia, an Investcorp company, is a business-to-business media company serving the financial industry and the related fields of professional services and technology. SourceMedia offers its clients and subscribers professional information services – both print and digital – industry-standard data applications, in-depth seminars and conferences, research, and specialized marketing services.
Mary Kathleen Flynn
Editor in Chief, M&A