October 7, 2015, NEW YORK – Health care M&A’s unbridled growth outlook appears to be losing steam, according to the latest reading ofSourceMedia’s Mid-Market Pulse (MMP). The September M&A 3-month forecast was in the 70s, still solidly in expansion territory, but nonetheless well off the sizzling 90s registered in the earlier March reading.
The MMP, published by Mergers & Acquisitions in partnership withMcGladrey 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. Dealmakers polled in August gave the health care sector a 3-month forecast reading of 78.1, as mentioned a striking difference from the 91.2 score earlier this year. This recent reading’s 12-month outlook was even lower at 66.9.
“In recent years, M&A in the sector has been driven by the Affordable Care Act, which has fueled widespread consolidation as providers search for cost efficiencies,” said Mergers & Acquisitions Editor in Chief Mary Kathleen Flynn. “Over time, the impact of ACA on consolidation in the sector is expected to lessen.”
Both the 3-month forecast and the 12-month forecast beat out projections for overall M&A, which scored 65.4 and 62, respectively. Deal multiples, one of the composite index’s components, showed health care higher than overall M&A in the near and intermediate terms.
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 to:www.themiddlemarket.com/mmp-healthcare-0915
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. Though the polling occurred before the stock market volatility of late August, respondents were clear in their concern for the economy, including China’s economic deceleration.
Many mentioned the ACA’s impact on the market. “ACA will continue to push even the largest companies into M&A to stay relevant in the shrinking healthcare universe,” one dealmaker said.
Others pointed to the 2016 presidential election. “Policy changes are all but assured and that will affect how regulators and investors feel about certain sectors,” a respondent noted.
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
covers all aspects of middle-market dealmaking, including identifying acquisition targets, negotiating transactions, performing due diligence, and closing deals. With more than 42,000 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 some 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.
Effective Oct. 26, 2015, McGladrey will unite with fellow members of our global network under the common brand name RSM. McGladrey LLP is the leading U.S. provider of assurance, tax and consulting services focused on the middle market, with 8,000 professionals and associates in 80 cities nationwide. A licensed CPA firm, McGladrey serves clients around the world through RSM International, a global network of independent accounting, tax and consulting firms. For more information, join our Facebook fan page at McGladrey News, follow us on Twitter@McGladrey, and connect with us on LinkedIn, and/or on YouTube.
For more information, please contact:
Mary Kathleen Flynn
Executive Marketing Director