Overall M&A Market Commentary
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GDP growth in 1Q18 was 2.2%, down from the 2.9% recorded in 4Q17. This reflects a continuation of the recent trend of a soft first quarter GDP growth followed by more rapid growth later in the year. Supporting this trend observation, CNBC reported that corporate after tax profits were up 5.9% in 1Q18, far better that the 1.7% growth recorded in 4Q17. This suggests a potential for improvement in GDP growth later in 2018. In addition, a positive June 2018 jobs report indicates we have a strong economy where the demand for new workers is pulling idle laborers into the workforce. Because of these factors and other positive trends, analysts believe that the U.S. economy is picking up significant momentum in early 2018. For example on July 16th, the Atlanta Fed upgraded its 2Q18 forecast of GDP to 4.5% up from 4.0% estimated earlier in the year. There are signs that gathering momentum produced by the corporate tax rate reduction, solid consumer spending, more investment in equipment and improved industrial production will lift the annual 2018 GDP growth to 3.0% by the end of 2018.
The Trump Administration’s focus on “re-establishing fair trade” through the use of tariffs has increased volatility in the financial markets. At least initially, the effects of the tariffs are expected to offset some of the strong economic growth activity recorded so far this year, but the tariffs could possibly have more dramatic negative effects later in 2018.
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