Overall M&A Market Commentary
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The fourth quarter of 2019 saw many positive changes in the perception of the U.S. economy and business climate. Corporate optimism increased as strong labor market trends and wage growth led to escalated consumer spending. Uncertainty associated with the China trade and tariff dispute was reduced due to the anticipated signing of a phase one trade agreement with China. Weak holiday sales reported by mall retailers was more than offset by strong online retail sales leading to an overall robust holiday retail season.
Everything looks positive, but with the economic recovery hitting a record 128-month run, a recession must surely be around the corner! Brian Wesbury, Chief Economist of First Trust, wrote on December 30, 2019, “One of the persistent flaws in economic thinking of many analysts and investors is that an economic expansion has to come to an end because of old age alone. History contradicts this widespread claim. Research from the San Francisco Federal Reserve Bank in 2016 shows that old economic expansions are no more likely than young expansions to die in the following year.” The tail winds for the economy remain strong. Finally, a level of “recession fever” has broken as fewer economists and economic prognosticators continue to be obsessed with recession probability predictions and doom and gloom economic forecasts.
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.