Bridgepoint Midwest M&A Index, Q4-13

Positive end to a record year; acceleration expected to continue

March 4, 2014 – The Bridgepoint Midwest M&A Index posted another solid gain in the fourth quarter of 2013. The consecutive increases of 15.4% and 8.9%, in the third and fourth quarters respectively, signaled a sustained rally after decreasing in the first two quarters of 2013. The strong quarter-to-quarter increase maintained the index well above 100 at 116.3. The index reflects a solid rebound in the number of Midwest companies that participated in a merger or acquisition over the past six months.

On the surface, interest in M&A activity at the onset of 2013 seemed weaker compared to 2012 as companies and business owners rushed to complete deals before tax law changes took effect. However, after a tepid start to 2013, buyers and sellers picked up their pace in the latter half of the year. Midwest deal flow continues to reflect an upward trend, as evidenced by 2013 representing the highest level of deal activity recorded since index inception in 2006. Valuations remain at above average levels fueled by high demand, low supply for quality deals, record buyer cash stockpiles and easy access to debt with historically aggressive terms.

Midwest median deal size has continued to increase over the past 4 years. Corporates and sponsors are refocusing their attention on larger targets with strong capital markets support to supplement organic growth.

“As the sense of stability returns to both the economy and corporate boardrooms, buyers and sellers will continue to pursue meaningful opportunities with a focus on protecting, supplementing and enhancing top-line growth.” said Matt Plooster, Managing Principal of Bridgepoint Merchant Banking. “Bridgepoint expects very strong deal-making activity in the region to continue into 2014, outpacing national volume growth due to a stable regional economy and a robust financing environment.”

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 refinancings as well as 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.