Middle-market M&A exhibited modest growth in July for the second consecutive month, according to the most recent readings of Mergers & Acquisitions’ M&A Conditions Index (MACI). The composite score for the MACI was 51.8, about on par with the 52.3 reading in June.
However, the July composite scores of the previous two years were significantly higher, with the month delivering 57.4 in 2015 and 57.6 in 2014, indicating that, while conditions may be improving, challenges remain in closing deals. Indeed, the component that measures completed deals dropped to 45.8, down from 50.6.
The component that tracks divestitures also fell. The July divestitures score was 48.0, down from 53.7 in June. Corporate sell-offs, especially on the part of consumer goods makers, have provided one bright spot in an otherwise dim year for M&A. In March, the divestitures component soared to 88.3.
In July, the index components that track signed letters of intent, M&A business activity and M&A staffing all rose, bolstering predictions that dealmaking will improve in the second half of the year, although transaction
volume is unlikely to hit the levels seen in 2014 and 2015.