Central Pennsylvania regional M&A update:Q3-2016

M&A activity

M&A in Central Pennsylvania followed the national trend in the third quarter of 2016 (Q3-2016) with the number of closed transactions slowing by approximately 19% from the prior quarter, from 36 to 29. The 29 closed transactions were on par with the same period in 2015. Year to date, 2016 continues to lag 2015’s strong M&A numbers with 88 reported closed transactions vs. 104 for the first three quarters of 2015, a decline of approximately 15%, which is in line with the national decline in number of middle market M&A transactions of 16.5% through September.

While large scale M&A headlines have begun to dominate that national press with the recent announcements of transactions between AT&T and Time Warner ($85 billion) and Qualcomm and NXP Semiconductor ($39 billion), closed transaction values in the Central Pennsylvania region trended down in Q3-2016 to $1.4 billion from the high levels seen in the two prior quarters ($9.3 billion and $7.4 billion, respectively) as there were no $1.0 billion+ transactions to drive aggregate transaction value higher as in prior quarters.

Central Pennsylvania regional market M&A activity:
Aggregate transaction value and number of deals

The consumer sector led the Central Pennsylvania region’s M&A activity with 27.6% percent of the total deals announced in Q3-2016. The industrials sector was second with 24.1% of the total deals for the period. Financials and information technology followed, each accounting for 17.2%. Materials, energy and healthcare sectors comprised the balance of the total for the period representing 6.9%, 3.4% and 3.4%, respectively.

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

There were six middle-market transactions with reported values announced during Q3-2016, up from three during Q2-2016. Q3-2016 also marked an increase from two middle-market deals with reported values for the same period in 2015.

Central Pennsylvania regional middle-market M&A activity:
Aggregate transaction size and number of deals

Central Pennsylvania regional middle-market M&A activity:
Average transaction size

Source: Capital IQ and Baker Tilly Capital research, September 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 was located in the Lehigh Valley area, while the largest number of sellers was located in the Harrisburg area during Q3-2016.

Buyers by location

First three digits of ZIP codes included in each region, as categorized by S&P Capital IQ:
Altoona: 166, 168; Harrisburg: 170, 171, 172, 178; Lancaster: 173, 174, 175, 176; Reading: 179; Lehigh Valley: 180, 181, 183; Williamsport: 197, 177.

(xlsx, Notable Deals tab)  

Source: Capital IQ and Baker Tilly Capital research, September 2016

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