M&A Slump Deepened in March

March yielded only 88 completed deals, significantly lower than the same month the previous year (147) and lower than the previous month (107), according to data from Thomson Reuters. The results from Mergers & Acquisitions’ Mid-Market M&A Conditions Index (MACI) delivered more bad news but also some potential bright spots. (See related chart.) 

After a brief rise in early-stage activities in February, leads for new deals flattened, and signed letters of intent dropped in March, according to the MACI. But availability of financing picked up in March (to 43.0, from an historic low of 35.7 in February). And divestitures absolutely soared (to 88.3, up from 51.9). Thanks to these two components (not shown on the chart), the March composite score rose to 54.6, up from the February score of 51.5. 

Over the last several months, dealmakers have cited a wide range of concerns, including China’s economic slowdown, the refugee crisis in Europe, threats of terrorism and the uncertainty of U.S. presidential elections. Credit tightening over the last several months has also played a role in slowing dealmaking activity. Most sources interviewed by Mergers & Acquisitions recently say they expect to see better news in the second half of the year, especially as interest rates now seem unlikely to rise.

See the table, below, for a list of deals that closed in March.

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. Our data provider is Thomson Reuters, which updates its databases continuously. We use the data available at press time.