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Mid-Market M&A Shows Promising Start to Second Half of 2014

August 21, 2014, 07:26 AM
Filed Under: Mergers & Acquisitions

SourceMedia’s Mergers & Acquisitions Conditions Index (MACI) edged higher in July, boosted by a rise in early-stage deal flow. The increase indicates that mid-market dealmakers are generally optimistic that the momentum experienced in the first half of the year is likely to extend over the remainder of 2014.

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 July reading was based on a survey of 253 dealmakers. For a complete analysis of the MACI’s most recent data, visit:

“The pace of growth in overall deal flow picked up again in July after a seasonal slowdown in June, demonstrating that the underlying conditions for M&A remain strong,” said Mary Kathleen Flynn, Editor-in-Chief of SourceMedia’s Mergers & Acquisitions publication.

Leads and Completed Deals also rose in July, registering scores of 67.2 and 53.7 respectively. Meanwhile Signed Letters lagged at 58.8, according to the July 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 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 July Composite score of 57.6 was an increase over June’s 56.0, but didn’t reach as high as May’s 57.9. “The Composite score indicates that the pace of expansion in overall deal flow sped up again in July, after a dip at the beginning of the summer in June,” Flynn said.

Early-stage deal flow continued to expand in July, as illustrated by Leads, which registered 67.2 in July compared to 65.6 in June.

Dealmakers reported fewer Signed Letters in July, reflecting a holdover from the June slowdown in growth, according to Flynn.

The index’s Bidders component also dropped, to 62.2 in July against June’s 68.7 reading. Fewer bidders per deal indicate a healthier M&A market, which is why this component is calculated as a contrary indicator in the Composite.

What Respondents are Saying

Survey respondents are encouraged to add verbatim comments to their answers. Though optimistic about the next six months, dealmakers are wary about a possible spike in long-term interest rates. “Changes in interest rates will impact both leverage and acquisition multiples,” one respondent said.

Another noted: “We are seeing increased demand from sellers who are now considering to sell based on increased multiples.” The same respondent said it was critical to jump on that demand while debt is still at historic lows.

Other dealmakers cautioned that regulation still has a heavy hand on the market and, as one remarked, “continues to be a drain on activity.”

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.

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 at

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, is continuously updated, providing real-time information and analysis of news and trends in M&A.

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