June 04, 2014, NEW YORK – Dealmakers believe manufacturing will shine over other sectors in the next three months and year, according to the second installment of SourceMedia’s Mid- Market Pulse (MMP). The MMP, published by Mergers & Acquisitions in partnership with McGladrey LLP, is a forward-looking sentiment indicator that monitors the near-and intermediate-term outlook for merger and acquisition activity within the middle market.
The most recent MMP composite index three-month reading of 73.8 indicates confidence in overall M&A activity for the coming quarter. The 12-month composite reading of 75.9 signaled continued optimism for the intermediate term.
“A significant percentage of dealmakers expect overall transactions to increase over the next quarter and over the next year and M&A in the manufacturing sector to rise even more dramatically,” said Mary Kathleen Flynn, editor-in-chief of Mergers & Acquisitions.
Each month, the index spotlights an individual industry and presents respondents’ expectations for deal activity within that specific sector. This index, the industry in focus is manufacturing, and sentiment scores outpaced the overall market: the three-month reading for manufacturing came in at 80.6 and the 12-month at 81.8. For a complete analysis of the MMP’s most recent data, go to www.TheMiddleMarket.com/mmp-manufacturing.
“The composite score of 81.8 for manufacturing in the 12-month forecast shows expectations run particularly high for the sector in the long term,” Flynn said. “This trend is fueled by the rise of medical devices and other innovative technologies currently thriving in the U.S. manufacturing industry.”
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 three- 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.
A Look at the Numbers
In the three-month forecast, Manufacturing came out ahead of the overall composite index in Deal Multiples, registering 88.9 against the overall M&A market score of 79.8.
“Regulatory and tax issues are expected to have less impact on the manufacturing sector than on the health care sector, which we examined in the previous month,” Flynn said.
In the 12-month forecast, Deal Volume scored big with a reading of 95.9, which was close to the overall M&A market reading of 96.1.
What Respondents are Saying
Survey respondents are encouraged to add verbatim comments to their answers. Many pointed to ready capital and pent-up demand as reasons for their positive outlook.
“The supply of quality companies is limited. Good manufacturing companies that come to market in the next three months and 12 months should command higher multiples,” an investment banker said.
A respondent from a private equity firm attributed the uptick to “Baby Boomer owners desiring to exit and sell their companies.”
Other M&A experts said that improving economic conditions will be the key to increased deals in the manufacturing sector.
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.
About SourceMedia Research
SourceMedia Research was launched in 2010 to operate in tandem with the company’s existing news and analysis, events and marketing solutions operations. Building on SourceMedia’s strong audience communities, and working closely with its editorial teams, SourceMedia Research provides a full range of industry-standard capabilities, including quantitative and qualitative surveys, data analysis, panel management, and white paper development. Surveys are developed independently by our subject matter experts, as well as in consultation with syndicate partners and clients. Data and insight derived from SourceMedia’s research studies can support strategic and tactical decision-making, product development and demand analysis, and the creation of custom research, thought-leadership and positioning programs.
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.
McGladrey LLP is the leading U.S. provider of assurance, tax and consulting services focused on the middle market, with more than 6,700 people in 75 cities nationwide. McGladrey is a licensed CPA firm and serves clients around the world through RSM International, a global network of independent assurance, tax and consulting firms. McGladrey uses its deep understanding of the needs and aspirations of clients to help them succeed. McGladrey meets the needs of private equity firms and their portfolio companies with integrated transaction advisory, tax, assurance and consulting services. Clients benefit from a single-point-of-coordination service model and teams that operate as strategic partners throughout the private equity life cycle. For more information like us on Facebook at McGladrey News, follow us on Twitter @McGladreyPE and/or connect with us on LinkedIn.
For more information, please contact:
Mary Kathleen Flynn