For months, dealmakers have predicted that M&A in 2014 would beat 2013, and data for the first half of the year is proving them right. The first half of 2014 yielded more completed middle-market transactions worth more money than the same periods in both 2012 and 2013, according to Thomson Reuters. The first six months of 2014 produced 1,057 deals valued at $137.9 billion, compared with 1,023 deals valued at $120.6 billion in 2012 and 996 deals valued at $123.5 billion in 2013. (See related graphic to see how the first half of 2014 compares with previous years.)

The best month for middle-market M&A in 2014 so far was January, which benefitted from deals that didn’t quite close by year end. (See chart below). The first month of the year generated 216 completed transactions valued at $30 billion. Coming in second was April, which generated 203 transactions valued at $29.9 billion. The worst month was May, which produced only 145 deals valued at $16.1 billion, in part due to bank holidays in the U.S. (Memorial Day) and Europe (Ascension Day). Concerns that May might have marked the beginning of a seasonal slowdown were mollified by a pickup in June, which yielded 171 deals valued at $20 billion. 

The good transaction news also comes amid the best fundraising climate for private equity firms since before the recession. PE firms raised $190 billion globally in the first six months of 2014, setting them on course to match, if not exceed, 2013’s performance in terms of capital collected, according to PEI. In 2013, funds globally pooled $420 billion, the highest figure since fundraising was hit by the financial crisis in 2008.

Some examples of firms that raised funds in the first half include: Energy Capital Partners, which closed a $5 billion fund; First Reserve Corp., which closed a second energy infrastructure fund with $2.5 billion in commitments; and Blue Sea Capital, which raised a debut $327 million fund.

Private equity professionals are reporting an increasing number of deal books stacking up on their desks, thanks in part to the hustle from bankers and the array of financial offerings from lenders.

John Martin, chief executive of GE Antares Capital, reports an increase in deal volume and new deal activity. “From our perspective, it feels busy.”

Several sectors were very active, including health care and pharmaceuticals. Some deals that stood out in the first half include: Cinven Group Ltd.’s purchase of health services company Medpace Inc. for $915 million;  the $602 million sale of Hi-Tech Pahrmacal Co. Inc. to Akorn Inc. (Nasdaq: AKRX);  Bristol-Myers Squibb Co.’s (NYSE: BMY) acquisition of iPierian Inc. for $175 million, with the potential for additional payments totaling $550 million, along with future royalties on net sales.

The manufacturing sector was also busy: Colfax Corp. (NYSE: CFX) bought industrial vacuum manufacturer Victor Technologies Group for $947.3 million; and Microchip Technology Inc. (Nasdaq: MCHP) paid $394 million for Supertex Inc. (Nasdaq: SUPX), a maker of semiconductors used in the LED lighting and telecommunication industries.

Another notable deal was Thoma Bravo LLC’s purchase of hotel reservation service TravelClick Inc. in a leveraged buyout valued at $930 million. Toy companies were also on the move with private equity firm Propel Equity Partners, Hot Wheels-owner Toy State and Mattel Inc. (Nasdaq: MAT) each completing deals. Mattel, which owns the Barbie, American Girl, Thomas & Friends and Fisher-Price Brands, spent $460 million for Mega Brands, pitting the toy maker in direct competition with Lego Group. (For a full list of completed deals from the first quarter, click here.)

Adding to the positive outlook, a flurry of large blockbuster deals were announced, including the $67 billion purchase of DirecTV (Nasdaq: DTV) by AT&T Inc. (NYSE: T). Among the others were Lafarge SA with Holcim Ltd., considered the biggest cement deal ever, and General Electric Co.’s (NYSE: GE) proposed $17.1 billion purchase of Alstom SA’s energy assets, which would be its largest acquisition.

 “We’ve all been talking about when we’re going to have that break-out M&A year and certainly one of the reasons why it hasn’t occurred of late is just a lack of confidence with CEOs,” says Peter Alternative of Mirus Capital Advisors. “Shareholders are saying it’s time to invest in growth, and M&A is a way to get there.” (For more on Alternative’s thoughts about dealmaking, watch our video conversation from ACG Boston.)

Editor's Note: To measure activity in the middle market, Mergers & Acquisitions looks at transactions that fulfill several requirements: Deals must have a value of roughly $1 billion or less; they must be completed (not just announced) within the timeframe designated; and they must include at least one U.S. company in the role of buyer and/or seller. Excluded from our charts are: recapitalizations; self-tenders; exchange offers; repurchases; stake purchases; and transactions with undisclosed values, buyers or sellers. The source for all data is Thomson Reuters.

Subscribe Now

Complete access to real-time information and analysis of news and trends in the industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.