(PRWEB) July 07, 2014
According to the third report in SourceMedia’s Mid-Market Pulse (MMP), dealmakers expect to see growth in M&A activity over the next 12 months in the overall market as well as in the financial, insurance, and real estate (FIRE) services sector. The MMP, published by Mergers & Acquisitions in partnership with McGladrey LLP, is a forward-looking sentiment indicator that monitors near-and intermediate-term outlook for merger and acquisition activity within the middle market.
The most recent MMP composite index three-month reading of 70.8 marks dealmaker optimism for overall M&A activity for the coming quarter, while the 12-month composite reading of 71.8 indicates that will continue in the intermediate term.
Each month, the MMP index spotlights an individual industry and presents respondents’ expectations for deal activity within that specific sector. This month’s index focuses on the financial, insurance, and real estate services (FIRE) sector. In the near term, the overall market outpaced the FIRE sector by 4.8 index points. However, over 12 months, the outlook swaps as the FIRE services sector reads slightly higher than the overall M&A market with a composite score of 74.7. For a complete analysis of the MMP’s most recent data, go to http://www.TheMiddleMarket.com/mmp-FIRE.
“In the intermediate term, FIRE is expected to grow more than the overall market,” said Mary Kathleen Flynn, editor-in-chief of Mergers & Acquisitions. “Regulatory and tax issues are among the factors driving M&A in FIRE, especially as banks look to divest non-core assets.”
Inside the MMP
The Mergers & Acquisitions Mid-Market Pulse (MMP) is a monthly barometer of sentiment in the mergers and acquisitions business derived from monthly surveys of approximately 250 executives in private equity firms, investment banks, lenders, and advisory firms in accounting, law, and consulting.
Based on a regular set of recurring questions about expectations and trends across a range of key issues in M&A, the MMP is a leading indicator for potential changes in momentum in M&A activity. Various indicators that make up the MMP include projected deal volumes and pricing, staffing resource utilization levels, and the expected impacts of economic conditions, taxes and regulatory policy on future M&A activity.
Survey responses describe expectations and outlooks for three- and 12-month forward periods to arrive at indicator scores. Respondents also are asked to elaborate on their responses and provide opinions about other conditions that affect their M&A outlook.
A Look at the Numbers
In the near-term, the FIRE services sector scored higher in the Tax Impact component than the overall industry with readings of 92.6 and 71.8 respectively.
The same held true over the intermediate term with FIRE registering 87.5 in the Tax Impact component compared to 81.1 for the overall market.
FIRE registered higher in Deal Multiples than the overall industry in the 12-month forecast with a reading of 73.9 compared to 70.1.
What Respondents are Saying
Survey respondents are encouraged to add verbatim comments to their answers. Many echoed the MMP Index’s sentiment about the role taxes will play in M&A activity.
“M&A activity is being driven almost solely by the regulatory bodies,” one respondent said. “There is almost a fear in the industry that regulators are going to come after them next.”
Another said: “Government regulation and instability is the most concerning issue.”
Some deal makers observed a recovery in the real estate sector, which impacts the other parts of the FIRE services sector. “Real estate is slowly coming back, as is consumer confidence,” the respondent said. “The time is right for the economy to really start a slow but steady growth.”
SourceMedia, an Investcorp company, is a business-to-business media company serving the financial industry and the related fields of professional services and technology. SourceMedia offers its clients and subscribers professional information services – both print and digital – industry-standard data applications, in-depth seminars and conferences, research, and specialized marketing services.
About SourceMedia Research
SourceMedia Research was launched in 2010 to operate in tandem with the company’s existing news and analysis, events and marketing solutions operations. Building on SourceMedia’s strong audience communities, and working closely with its editorial teams, SourceMedia Research provides a full range of industry-standard capabilities, including quantitative and qualitative surveys, data analysis, panel management, and white paper development. Surveys are developed independently by our subject matter experts, as well as in consultation with syndicate partners and clients. Data and insight derived from SourceMedia’s research studies can support strategic and tactical decision-making, product development and demand analysis, and the creation of custom research, thought-leadership and positioning programs.
About Mergers & Acquisitions
Mergers & Acquisitions covers all aspects of middle-market dealmaking, including identifying acquisition targets, negotiating transactions, performing due diligence, and closing deals. Serving nearly 18,600 print subscribers, our monthly magazine is published in partnership with the Association for Corporate Growth (ACG), a global organization comprised of thousands of private equity firms, corporate officials and intermediaries. With more than 25,000 unique monthly visitors, themiddlemarket.com is continuously updated, providing real-time information and analysis of news and trends in M&A. Our online video series features interviews with high-profile dealmakers, including private equity partners, strategic buyers, investment bankers and other advisers.
McGladrey LLP is the leading U.S. provider of assurance, tax and consulting services focused on the middle market, with more than 6,700 people in 75 cities nationwide. McGladrey is a licensed CPA firm and serves clients around the world through RSM International, a global network of independent assurance, tax and consulting firms. McGladrey uses its deep understanding of the needs and aspirations of clients to help them succeed. McGladrey meets the needs of private equity firms and their portfolio companies with integrated transaction advisory, tax, assurance and consulting services. Clients benefit from a single-point-of-coordination service model and teams that operate as strategic partners throughout the private equity life cycle. For more information like us on Facebook at McGladrey News, follow us on Twitter @McGladreyPE and/or connect with us on LinkedIn.
For more information, please contact:
Mary Kathleen Flynn