Mid-Market M&A Dropped Again in April

Dealmaking dipped again in April, with the composite score of Mergers & Acquisitions’ Mid-Market M&A Conditions Index (MACI) of 52.0, down from the March score of 54.6. (See related chart). Despite the drop, the April composite score beat the 51.3 average for the first quarter, offering a glimmer of hope for the second quarter.

Looking at selected components of the index, leads for new transactions dropped, and signed letters of intent stayed essentially flat. Respondents to our survey said they experienced an increase in completed deals, but, according to data provided by Thomson Reuters, the volume of closed mid-market transactions declined in April.

Availability of financing, which hit a record low in February, rose to 47.1 in April, suggesting that the tightening of credit may be slowing down.

Corporate sell-offs remained robust, delivering a divestitures component score of 56.5, but activity was nowhere near as high as the previous month, when the score soared to 88.3 (not shown). Many corporations, including Newell Rubbermaid (NYSE: NWL) and Procter & Gamble Co. (NYSE: PG), are casting off low-performing product offerings to focus on high-growth brands, a trend we expect to see more of in 2016.

One sector that produced a lot of deal news in April was specialty chemicals. In addition to several announcements, CVR Partners LP completed its acquisition of fertilizer maker Rentech Nitrogen Partners for about $840 million. We expect more activity among chemical makers in the months to come. See the table, below, for more middle-market transactions that closed in April.

See the table, below, for more middle-market transactions that closed in April.

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.