Takers of the monthly Mergers and Acquisitions’ survey show that they believe the Brexit, the financial hurdles in China, the uncertainty in the looming US presidential election and the global terrorist movements have deepened the hole where the M&A finds itself in. Understandably, dealmakers have been concerned with current political issues and its implications around the world. As a result, the mid-market negotiations have been significantly reduced. For the month of June, successful mid-market deals were down to 85. A year ago, that number was 171 and during May of this year, it was 109. The tally now for June lands in the regions reminiscent of 2009, when the Great Recession ended. On the brighter side, however, during the same month’s regular survey, projections for the coming 12 months looked more promising.
The month of June had been showing two sides of the coin. The MACI (M&A Conditions Index) during the period climbed to 52.3, easily besting that of May when it was 48.7. Big players from the corporate industry, most significantly those in consumer goods, have shifted their interests on aggressive yet promising brands – while steadily departing from less-lucrative ones in the process. The emergence of divestment had evidently raised the MACI for June.
It is also worth noting that the M&A Conditions Index during February of this year was at its lowest point at 35.7. However, partakers of the aforementioned survey have stated that the indicator for financial availability has grown to the mark of 51.9. The last time this happened was September of 2015.
Meanwhile, experts are led to believe there will be an imminent chain of large market capitalization deals within the World Wide Web. This is directly due, as they believe, to the $26.2 billion move by Microsoft Corp. of acquiring the popular social networking site for white-collars, LinkedIn Corp. However, based on survey respondents, the 3-month projection rating for mid-markets, TMT (Technology, Media and Telecom) got the lowest score for MMP (Mid-market Pulse) of 48.4 not just for all of the sectors, but also in its history. Other partakers have voiced those small players in the tech industry may have a hard time keeping up due to the incursion of sizable corporations to untraditional regions. While assessments have not been low during current times, some believe the disparity within hitting it big and successful negotiations has made circumstances unfavorable.
Furthermore, thoughts of hurdles amongst sellers and buyers, and done-deals have only been supplemented due to sanctioned LOIs (Letters of Intent) amidst prevailing decline.
In general, with the US presidential election to come to a decision in November, ending uncertainties that came with it for dealmakers, the mid-market transactions may be expected to return to normal later on in the year. Barring retail and consumer goods where more confidence to short term deals were given, the majority of the sectors have fared much better ratings projections during a 12-month span as opposed to the more immediate 3-month reading.