Coming off a sluggish start in the first quarter of 2014, US middle-market M&A activity rebounded strongly in the second quarter with significant increases in both deal count and dollar volume. Based on the strong second quarter, YTD Q2 2014 deal count is now 7.1 percent higher than YTD Q2 2013 and dollar volume is up 24.6 percent for the same time periods. Deal count and dollar volume are at their highest quarterly levels since Q4 of 2012. Corporations are driving the M&A activity as they execute on board room strategies utilizing cash reserves they have been actively building since the recession. The overall US economic outlook has seen positive signs with the lowest recorded unemployment rate since the financial crisis at 6.1 percent (from its peak at 10.2 percent) with an addition of 288,000 jobs in the month of June according to the Bureau of Labor Statistics. Further, GDP data released for Q2 2014 was higher than expected, with real GDP expanding at an annual rate of 4 percent. US equity markets were also favorable, with the S&P 500 posting gains of 5.2 percent for the quarter (YTD +7.1 percent). As economic expansion persists and the leveraged loan market continues to support M&A transactions, we would expect M&A activity in US markets to continue its upward trajectory throughout the second half of 2014.
|US middle-market M&A activity||1,684 Deals|
|US middle-market M&A average deal multiple||8.5x|
|Cash and short-term investments of S&P 500||$1,250 billion|
|Private equity capital raised in fourth quarter||$44 billion|
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