Bridgepoint Midwest M&A Index, Q4-12

Midwest deal volume continues to outpace U.S. market

March 12, 2013 – The number of Midwest companies that participated in a merger or acquisition over the past six months increased sharply in the fourth quarter of 2012. After decreasing slightly in the previous quarter, the index increased 10.6% from 117.9 in the third quarter to 128.5. Ending the year at an all-time high, the latest index increase of 30.9% on a year-over-year basis represents the largest growth in 8 quarters.

The current index level reflects the continued strength of Midwest M&A deal volumes in the face of slightly declining volumes in the broader U.S. M&A market. According to Bridgepoint, both median deal sizes and valuations increased as well in the Midwest in the fourth quarter.

The continued growth of deal activity reflects that Midwest companies are receiving strong M&A interest from both sponsors and other corporates, while middle market M&A and private equity volumes across the U.S. and abroad declined in 2012. With the threat of increased taxes, investors were particularly keen to complete larger deals before the end of the year, with median Midwest deal size increasing 69.3% in the quarter.

“While the expected increase in the capital gains tax rate undoubtedly played some part in the latest growth, we are seeing increased M&A interest across the board in Midwest companies ,” said Matt Plooster, Managing Principal of Bridgepoint Merchant Banking. “Additionally, Midwest companies themselves are increasingly turning to acquisition strategies to accelerate growth.”

The current environment represents an attractive opportunity for Midwest business owners to explore liquidity options. Middle market lenders are also providing attractive leverage to support acquisition and/or growth strategies.

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Bridgepoint Merchant Banking is a lower and middle market investment banking and private equity firm headquartered in Nebraska and Iowa that serves clients over their corporate lifecycles by providing merger and acquisition and corporate finance advisory services. Bridgepoint Merchant Banking also invests capital directly into companies through its private equity and venture capital funds.