M&A Conditions Index: May composite at 55.8

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Dealmaking sped up in May, continuing a 12-month period of expansion, according to Mergers & Acquisitions’ M&A Conditions Index (MACI). The MACI composite score increased to 55.8 in May, up from 54.0 in April.

Almost all index components rose. The most dramatic increase came from divestitures, which has been volatile in recent months. In May, divestitures soared 9.7 points to 56.3. In April, it dropped 12 points from March. Corporate spin-offs fueled a lot of M&A activity in 2016, so we’re watching the component closely.

One component that declined significantly in May was bidders, which dropped 6.7 points. A high number of bidders indicates fierce competition for the best deals, which contributes to inflated valuations. As such, we calculate the component as a contrary indicator; when the bidders component is down, the number of actual bidders is up. The component has been in contraction (under 50) since the beginning of 2016.

May Conditions Index

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