Economic and political uncertainty have put a damper on middle-market M&A activity all year, and professionals in the business do not expect a rebound anytime soon, according to the most recent reading of Mergers & Acquisitions’ Mid-Market M&A Conditions Index (MACI) and Mid-Market Pulse (MMP).

The May composite score for the MACI was 48.7, a decline from the 52.0 reading it registered in April. (See related chart, M&A Conditions Composite, May 2016.) The index was dragged down in part by a sharp contraction in the component that tracks divestitures, as a burst of deals by large companies to jettison non-core business lines slowed. (See related chart, Month to Month Trends.

Continuing a downward trend that began in January, completed middle-market deals dropped further in May, according to data from Thomson Reuters. (See related chart, Month by Month Look at 5 Years of Mid-Market M&A by Volume and by Value.) See the table, below the Editor’s Note, for a list of middle-market transactions that closed in May.

M&A professionals specializing in consumer goods and retail provided a rare source of optimism about the near-term outlook, according to the latest MMP. (See related chart, 3-Month Outlook, 12-Month Outlook.) The three-month score for that sector of 74.1 was far and away the most bullish sector score, with professionals serving most other sectors expressing the view that activity would continue to be depressed.

The consensus view is that uncertainty about the pending U.S. elections is to blame for much of the current slowdown. Consistent with that view is the fact that most respondents have a much more positive perspective on the 12-month outlook than the 3-month.

Sentiment is much more positive when it comes to the 12-month outlook, a function of the substantial list of questions that stand to be answered well before then (in addition to the U.S. election, several respondents pointed to the Brexit vote in the U.K. and signs of weakening in a range of major economies). Still, respondents are bracing for the eventual increase in U.S. interest rates that has been so long in the making. You are invited to participate in this month’s survey, which tracks your current M&A activity and your outlook for future activity. 

Editor’s Note on Methodology:

The MACI is a composite index of mergers and acquisitions activity in the U.S. It is the result of the Mergers & Acquisitions survey of approximately 250 executives in private equity firms, investment banks, lenders and advisor firms to track activity such as deals announced and deals completed, as well as acquisitions and divestitures. A reading of over 50 indicates an expansion relative to the prior month, and a reading below 50 indicates a contraction.

The MMP is a monthly sentiment indicator for the outlook of M&A activity and conditions. MMP results are presented as rolling aggregate indicators for both three- and 12-month outlook periods for macro M&A issues as well as for individual industry sector issues in healthcare, consumer/retail, manufacturing, energy, and technology/media/telecommunications on a monthly rolling basis. A diffusion index is produced by calculating the sum of percentages of those indicating on survey responses that describe a change in sentiment for three and 12 months (e.g., increase/positive, decrease/negative, or no change/neutral) to arrive at three-month and 12-month aggregate index values that are then averaged to create a total composite for the month. A reading of over 50 indicates an expansion relative to the prior month, and a reading below 50 indicates a contraction.

In addition to our monthly surveys, Mergers & Acquisitions uses data provided by Thomson Reuters about 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 completed deal charts are: recapitalizations; self-tenders; exchange offers; repurchases; stake purchases; and transactions with undisclosed values, buyers or sellers. Thomson Reuters updates its databases continuously. We use the data available at press time. 

Key Middle-Market M&A Deals Completed in May 2016

Date Acquirer Target Target Industry Value ($mil)
05/03/16 Siemens AG CD-adapco Group Inc Prepackaged Software 970.0
05/06/16 Stantec Inc MWH Global Inc Business Services 793.0
05/09/16 Shenandoah Telecommun Co NTELOS Holdings Corp Telecommunications 636.7
05/02/16 Lendmark Financial Svcs LLC Springleaf Hldg Inc-Branches Commercial Banks, Bank Holding Companies 624.0
05/02/16 Cindat Capital Management Ltd Hersha Hospity Tr-Hotel Hotels and Casinos 571.4
05/02/16 Micro Focus International PLC Serena Software Inc Prepackaged Software 540.0
05/11/16 GP Real Properties II C LLC BR Properties SA Real Estate; Mortgage Bankers and Brokers 533.4
05/01/16 Old National Bancorp Anchor BanCorp Wisconsin Inc Commercial Banks, Bank Holding Companies 465.5
05/02/16 Red Rock Resorts Inc Fertitta Entertainment LLC Textile and Apparel Products 460.0
05/13/16 CCL Industries Inc Checkpoint Systems Inc Measuring, Medical, Photo Equipment; Clocks 431.6
05/09/16 Southern Co PowerSecure International Inc Electronic and Electrical Equipment 421.9
05/03/16 Covey Park Gas LLC EP Energy Corp-Haynesville & Oil and Gas; Petroleum Refining 420.0
05/02/16 Communications Sales & Leasing PEG Bandwidth LLC Telecommunications 409.0
05/16/16 Investor Group Market Common Clarendon,VI Real Estate; Mortgage Bankers and Brokers 406.0
05/02/16 Permal Group EnTrust Capital Inc Investment & Commodity Firms,Dealers,Exchanges 400.0
05/18/16 MPG LLC Millennium Garages Repair Services 370.0
05/11/16 EnerCare Solutions Inc SEHAC Holdings Corp Repair Services 340.8
05/02/16 Acorda Therapeutics Inc Biotie Therapies Oyj Drugs 307.2
05/13/16 DiaSorin SpA Focus Diagnostics Inc Drugs 300.0
05/02/16 Mercury Systems Inc Microsemi LLC-RF Integrated Electronic and Electrical Equipment 300.0
05/11/16 Beijing E-Town Dragon Mattson Technology Inc Electronic and Electrical Equipment 298.6
05/02/16 The Clorox Co ReNew Life Formulas Inc Food and Kindred Products 290.0
05/02/16 CEB Inc Evanta Inc Business Services 275.0
05/09/16 Sprint Corp NTELOS Hldg Corp-Spectrum Asts Telecommunications 252.0
05/20/16 Washington RE Investment Trust Riverside Apartments Real Estate; Mortgage Bankers and Brokers 244.8
05/13/16 Grain Infrastructure Fund II TowerCo LLC-Commun Towers Telecommunications 244.0
05/02/16 First Busey Corp,Urbana,Il Pulaski Financial Corp,MO Savings and Loans, Mutual Savings Banks 217.7
05/17/16 KLX Inc Herndon Aerospace & Defense Measuring, Medical, Photo Equipment; Clocks 210.0
05/02/16 OceanFirst Financial Corp Cape Bancorp Inc Commercial Banks, Bank Holding Companies 200.5
05/02/16 NASDAQ Inc Boardvantage Inc Business Services 200.0
05/02/16 Investor Group Baltimore Apartment Portfolio Real Estate; Mortgage Bankers and Brokers 187.0
05/02/16 Hallmark Cards Inc Crown Media Holdings Inc Radio and Television Broadcasting Stations 176.2
05/02/16 Halyard Health Inc CORPAK MedSystems Inc Measuring, Medical, Photo Equipment; Clocks 174.0
05/16/16 Great Western Bancorp Inc HF Financial Corp Commercial Banks, Bank Holding Companies 139.5
05/04/16 Deka Immobilien Investment Fiduciary Tr Real Estate; Mortgage Bankers and Brokers 139.0
05/23/16 MainSource Finl Grp Inc Cheviot Financial Corp Savings and Loans, Mutual Savings Banks 112.3
05/25/16 Gildan Activewear Inc Alstyle Apparel Textile and Apparel Products 110.0
05/02/16 ACCO Brands Corp Pelikan Artline Pty Ltd Wholesale Trade-Nondurable Goods 103.0
05/20/16 Kohlberg & Co LLC The Meadows of Wickenburg LP Health Services 97.0
05/10/16 Weingarten Realty Investors Deerfield Mall,Deerfield,FL Real Estate; Mortgage Bankers and Brokers 92.8
05/23/16 National Health Investors Inc Bickford Sr Living-Memory Care Social Services 87.5
05/03/16 TPG Capital LP Credit Suisse Grp AG-Credit Credit Institutions 86.8
05/25/16 CooperSurgical Inc Recombine LLC-Coml Asts Health Services 85.0
05/09/16 SciVac Therapeutics Inc VBI Vaccines Inc Drugs 83.9
05/11/16 ERGObaby Carrier Inc New Baby Tula LLC Miscellaneous Retail Trade 82.0
05/31/16 Moody National Reit II Inc Marriott Springhill Suites Hotels and Casinos 74.1
05/31/16 Standard Motor Products Inc Gen Cable Technologies Corp-Au Transportation Equipment 71.0
05/13/16 Investor Group JHSF NY,JHSF NY2 Inc,JHSF Real Estate; Mortgage Bankers and Brokers 69.4
05/18/16 Earthstone Energy Inc Lynden Energy Corp Oil and Gas; Petroleum Refining 67.5
05/23/16 Exeter Property Group LLC Industrial Transportation and Shipping (except air) 66.0
05/02/16 Chegg Inc Imagine Easy Solutions LLC Educational Services 60.0
05/09/16 AmTrust Financial Services Inc Genworth Finl Mtg Ins Ltd Insurance 58.6
05/23/16 Zhejiang Yinlun Machinery Co Thermal Dynamics International Transportation Equipment 56.7
05/05/16 Midmark Corp Versus Technology Inc Communications Equipment 55.4
05/19/16 BNL K&N Management-Stores(4) Retail Trade-Eating and Drinking Places 46.9
05/03/16 DLH Holdings Corp Danya International Business Services 38.8
05/17/16 Republic Bancorp Inc Cornerstone Bancorp Inc,FL Commercial Banks, Bank Holding Companies 32.3
05/13/16 Full House Resorts Inc Bronco Billy's Casino & Hotels and Casinos 30.0
05/13/16 County Bancorp Inc Fox River Valley Bancorp Inc Commercial Banks, Bank Holding Companies 28.9
05/06/16 Investor Group Raleigh Flex Portfolio Real Estate; Mortgage Bankers and Brokers 21.1
05/11/16 Jazz Pharmaceuticals PLC Alize Pharma II SAS Business Services 20.5
05/05/16 Cedar Realty Trust Inc Glenwood Village Real Estate; Mortgage Bankers and Brokers 19.5
05/12/16 Avant Diagnostics Inc Amarantus Diagnostics Inc Health Services 18.9
05/04/16 Lippert Components Inc Project 2000 Srl Transportation Equipment 18.7
05/04/16 Xerium Technologies Inc JJ Plank Corp Paper and Allied Products 18.0
05/02/16 New Media Investment Group Inc Journal Multimedia LLC Printing, Publishing, and Allied Services 18.0
05/11/16 BioTelemetry Inc VirtualScopics Inc Measuring, Medical, Photo Equipment; Clocks 16.1
05/13/16 Lingerfelt Cos Towne Place at Greenbrier Real Estate; Mortgage Bankers and Brokers 15.6
05/23/16 Newport Capital Partners Hldg DDR Corp-Southtown Centre Real Estate; Mortgage Bankers and Brokers 15.3
05/04/16 Investor Group Hyatt Place King of Prussia Hotels and Casinos 13.0
05/04/16 American Addiction Centers Inc Solutions Recovery Inc Health Services 13.0
05/04/16 Arizona Mining Inc Arizona Minerals Inc Mining 11.4
05/09/16 Revolution Lighting Tech Inc TNT Energy LLC Construction Firms 10.0
Source: Thomson Reuters        

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