Bridgepoint Midwest M&A Index, Q1-13

Capital Markets Supporting Record Valuations

April 30, 2013 – The number of Midwest companies that participated in a merger or acquisition over the past six months declined in the first quarter of 2013. After increasing sharply in the previous quarter, the index decreased 13.8% from 128.5 in the fourth quarter to 114.6. On a year-over-year basis, the index decreased 1.6% from the first quarter of 2012.

With the previous quarter representing an all-time high index level, the latest decline was not entirely unexpected. It is evident that companies and private equity firms rushed to complete deals at the end of 2012 in anticipation of tax hikes in 2013. In addition, companies also turned their focus to smaller targets after completing larger deals at the end of 2012.

Despite the decline, the index level still represents a very healthy deal environment in the Midwest. Bridgepoint also reported that median Midwest M&A valuations grew to an all-time high in the first quarter. The broader U.S. deal environment saw a much more significant decline, with February and March closing as the two slowest months for private equity activity in the last three years (according to

“After the rush to close deals at the end of 2012, companies and sponsors took the first quarter of 2013 as an opportunity to regain their breath,” said Adam Claypool, Managing Principal of Bridgepoint Merchant Banking. “Despite that, we are seeing strong M&A interest and premium valuations for Midwest companies.”

“Substantial private equity, bank financing and junior capital interest in the middle market, and in Midwest companies in particular, is providing additional optionality for local companies, management team and business owners,” added Matt Plooster, Managing Principal of Bridgepoint Merchant Banking.

The current environment represents an attractive opportunity for Midwest business owners to explore liquidity options and to take advantage of the strong capital markets environment. Middle market lenders are providing attractive leverage to support ownership transition, 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.