Philadelphia regional M&A update: Q2-2016

Economic and market data

The preliminary unemployment rate in the Philadelphia region was estimated at 5.1 percent for May 2016, slightly above the national rate of 4.7 percent. The Philadelphia region unemployment rate has increased 0.3 percent from 4.8 percent in the first quarter of 2015.

Source: BLS.gov

The second quarter of 2016 (Q2-2016) showed mixed performance for the broader US equity market, as the S&P and DJIA closed up 1.9 percent and 1.4 percent, respectively; while the NASDAQ closed down 0.6 percent for the quarter. The second quarter market results reflected significant volatility with market sentiment being driven by both political and economic uncertainties related to the US political cycle and softening macro growths expectations.

M&A activity

There were 113 reported M&A transactions during Q2-2016, down from 131 transactions during the first quarter of 2016 (Q1-2016). Q2-2016 also marked a decrease of 40.8 percent from 191 deals for the same period in 2015.

The aggregate deal value of the M&A transactions with reported values was $667 million during Q2-2016, a significant decrease from the total deal value of $3.5 billion in Q1-2016 and $26.4 billion in the second quarter.

Philadelphia regional market M&A activity
Aggregate transaction value and number of deals

Source: S&P Capital IQ and Baker Tilly Capital research, June 2016

M&A activity by industry Q2-2016

The Consumer sector led the Philadelphia region’s M&A activity with 24.3 percent of the total deals announced in Q2-2016. Information Technology and Industrials were a close second and third with 23.4 percent and 23.4 percent, respectively. Healthcare, Financials, Materials, and Energy accounted for the remainder of the transactions representing 16.8 percent, 6.5 percent, 3.7 percent, and 1.9 percent, respectively.

Philadelphia regional middle-market M&A activity

There were four middle-market transactions with reported values announced during Q2-2016, down from fourteen during Q1-2016. Q2-2016 also marked a decrease of eighty-seven percent from thirty middle-market deals with reported values for the same period in 2015.

Source: S&P Capital IQ and Baker Tilly Capital research, June 2016
Middle-market is defined as transaction values between $10 million and $200 million.

Philadelphia regional middle-market average transaction size

The average transaction size of $32.4 million for the four middle-market deals with reported values in Q2-2016, was a $30.3 million decrease from the average transaction size of the fourteen deals with reported values in Q1-2016, and the lowest average value over the last sixteen quarters.

Source: S&P Capital IQ and Baker Tilly Capital research, June 2016
Middle-market is defined as transaction values between $10 million and $200 million.

Buyers and targets by location

As presented below, the largest number of buyers and sellers were located in the Philadelphia and southeastern Pennsylvania areas during the second quarter of 2016.

Buyer by location

Buyer by location

First three numbers of zip codes included in each region, as categorized by S&P Capital IQ:
Harrisburg – 170, 171, 172, 178; Lancaster – 173,174,175,176; Lehigh Valley – 180,181,183; Philadelphia – 190, 191, 192; Reading – 179, 195, 196; SE Pennsylvania – 189,193,194; South Jersey – 078, 079, 080, 081, 082, 083 084; Trenton – 085, 086, 087

Notable Q2-2016 closed middle-market deals >

Source: S&P Capital IQ and Baker Tilly Capital research, June 2016

View the full Philadelphia regional M&A update >


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