Overall M&A Market Commentary
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During early 2019, the volume of closed middle-market M&A transactions kept moving along at a steady, although unexciting pace. The strong U.S. economic conditions and expectations for above trend growth are encouraging many business owners to look at potential liquidity events and consider their strategic options. While these strong economic conditions are encouraging “window shopping”, they are not creating a sense of urgency with sellers. The result is a stable and unexciting M&A market. There are enough M&A deals to keep the deal community busy, but not enough to make the deal community happy.
Strong 1Q19 GDP growth of 3.1% indicates that the U.S. economic expansion will continue its record run in 2019. Although economists are predicting a slowdown in GDP growth to 2.4% for full year 2019, this level is still above trend and a sign of a continued healthy economy. According to the July 17, 2019 Chicago Fed Survey of Business Conditions report, “Respondents’ outlooks for the U.S. economy for the next 12 months improved, turning optimistic on balance. Respondents with optimistic outlooks highlighted good economic data, particularly for the labor market, and growing demand for their firms’ products. Respondents with pessimistic outlooks highlighted elevated policy uncertainty under the current U.S. presidential administration,particularly in regard to trade policy.”
For additional insight on middle market M&A, valuation multiples, strategic buyer / financial sponsor activity, and more please download the full copy of the Prairie Middle Market Perspective.