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More M&A in Larger Middle Market Businesses Has Ripple Effect

May 19, 2014, 07:16 AM
Filed Under: Industry News

An anticipated wave of mergers and acquisitions by larger middle-market companies could have a ripple effect on smaller middle-market businesses, according to Cindy Crotty, head of KeyBank’s Business Banking and Middle Market banking segments.

The May 2014 KeyBank Middle Market Business Sentiment Survey shows increasing interest by middle-market businesses in acquiring or merging with other companies. The survey showed a 13 percent year-over-year increase in the percentage of middle-market business leaders planning to expand via merger or acquisition. KeyBank collaborated with Lieberman Research to survey 149 financial decision makers in middle market businesses April 7-17.

In the most recent survey, one-third of middle-market business leaders surveyed indicated they are likely to complete an acquisition in the next six months. Significantly, 42 percent of those contemplating an acquisition are leaders at larger middle-market businesses (businesses with annual revenues between $500 million and $4 billion.)

Crotty said increased M&A by larger middle-market businesses have implications for smaller middle-market businesses, including unexpected opportunities for smaller middle market businesses to sell.

“The market is heating up. We have seen a significant increase in M&A activity in the first few months of 2014 than we saw in all of 2013,” Crotty said. “Even if they don’t have a plan to sell, smaller middle-market business owners might receive inquiries from interested acquirers or offers that they should not dismiss without careful consideration.”

Crotty said smaller middle-market business owners should evaluate their strategic plans and operations so they have a sense how any M&A involving their customers and suppliers might affect them.

While there is increased interest in mergers and acquisitions, the survey also showed most midde-market businesses leaders surveyed expect to grow by adding employees.

Key traces its history back more than 160 years and is headquartered in Cleveland, Ohio. One of the nation's largest bank-based financial services companies, Key has assets of approximately $90 billion as of Dec. 31, 2013.

Key provides deposit, lending, cash management and investment services to individuals, small and medium-sized business under the name KeyBank National Association. Key also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets trade name.

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