Driven by corporate divestitures and aided by increased availability of credit, middle-market M&A rose in June, according to the most recent readings of Mergers & Acquisitions’ M&A Conditions Index (MACI).
The composite score for the MACI was 52.3 in June, up from 48.7 in May. Signed letters of intent, however, remained in contraction, suggesting that there are still obstacles to closing deals. And the short-term outlook was mired by uncertainty about politics in the U.S. and beyond, according to the Mid-Market Pulse (MMP).
The biggest change from last month was in the component that tracks divestitures, which improved 11.4 points. Corporate sell-offs, especially on the part of consumer goods makers, have fueled middle-market transactions throughout the first half of the year. In March, the divestitures component soared to 88.3, possibly the peak. Large corporations, especially in the consumer goods sector, have been shedding slow-growing assets to focus on fast-growing brands.
M&A professionals specializing in technology, media and telecommunications (TMT) were especially pessimistic in the near-term outlook, according to the latest MMP. The three-month score of 48.4 for the sector was the lowest of the six high-growth industries measured. Poll results were collected before the U.K. vote to exit the European Union.