Pittsburgh regional M&A update: Q2-2016

Economic and market data

The preliminary unadjusted unemployment rate in the Pittsburgh region was estimated at 5.8 percent for the first quarter 2016 (Q1-2016), above the national rate of 4.7 percent. The Pittsburgh region unemployment rate increased 0.5 percent from 5.3 percent in the second quarter of 2015 (Q2-2015).

Source: BLS.gov (Data is not seasonally adjusted.)

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. This volatility is most likely attributable to Great Britain’s decision to leave the European Union, popularly known as “Brexit.”

M&A activity

There were thirty-nine reported M&A transactions during Q2-2016. Activity decreased from forty-one transactions during Q1-2016. Q2-2016 also marked a decrease from fifty-four deals for the same period in 2015.

The aggregate deal value of the M&A transactions with reported values was $2.3 billion during Q2-2016. This is an increase from the total deal value of $1.2 billion in Q1-2016. We would note that in the dramatic increases in aggregate deal values in the second and fourth quarters of 2013 and the first and third quarters of 2015 were driven by megadeals that closed in each respective quarter.

Pittsburgh regional middle-market M&A activity

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

M&A activity by industry Q2-2016

The Industrials sector led the Pittsburgh regional M&A activity accounting for 28.2 percent of the total deals that closed in Q2-2016. Information Technology sector had the second largest share of total transactions closed during the period with 23.1 percent. The Healthcare sector and the Consumer sector each represented 12.8 percent of the closed deals for the period. The Financials sector, Materials sector, and the Energy sector comprised the remainder of the closed deals for the period, with 10.3 percent, 7.7 percent, and 5.1 percent, respectively of the total.

The aggregate deal value of the three middle-market transactions with reported values was $235.6 million during Q2-2016. This is a decrease from the total deal value of $513.1 million during Q1-2016 and a decrease from $323.2 million during Q2-2015.

Pittsburgh regional middle-market M&A activity

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.

During the second quarter of 2016, there were three middle-market transactions with reported value. The average transaction size for Q2-2016 was $78.5 million. This marks a $38.1 million increase from the same period in 2015.

Pittsburgh regional middle-market
Average transaction size

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 targets were located in the Pittsburgh area during the second quarter of 2016.

Buyer by location

Target by location

Notable Q2-2016 closed Pittsburgh middle-market deals >

Source: S&P Capital IQ

View the full Pittsburgh regional M&A update >


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