Bridgepoint Midwest M&A Index, Q3-13

Acceleration expected to continue; valuations elevated

December 20, 2013 – The number of Midwest companies that participated in a merger or acquisition over the past six months rebounded in the third quarter of 2013. After decreasing in the previous two quarters, the index increased 15.4% in the second quarter to 107.3 in the third quarter.

It is evident that the rush to complete deals before the end of last year led to a deceleration of M&A closings in the first half of 2013. Fueled by aggressive capital markets’ support for leveraged deals and record levels of U.S. corporations’ cash stockpiles, deal flow has rebounded strongly in the latest quarter.

With the latest increase, the index level represents a very healthy deal environment in the Midwest. Bridgepoint also reported that median Midwest M&A valuations declined in the latest quarter, but remained at historically elevated levels. The broader U.S. deal environment also saw a solid rebound, with reporting the strongest private equity deal flow of 2013 in the latest quarter.

“After deal closings were pulled forward at the end of 2012, we continue to see many deals in progress in the first half of the year with momentum in closings expected to continue in the fourth quarter of 2013 and into next year,” said Adam Claypool, Managing Principal of Bridgepoint Merchant Banking. “The capital markets remain as aggressive as perhaps they’ve ever been, with lenders offering attractive leverage levels and terms to support transactions.”

The current environment represents an attractive opportunity for Midwest business owners to explore liquidity options and take advantage of premium valuations. 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 business owners and companies 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.