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Deals and Exits Snapshot for June 2016


June 2016

Middle market deal activity in June 2016 increased 6% year over year while capital invested grew by 39% to $5.3B.  The average deal size in June 2016 increased to $25.8 million compared to $19.7 million in June 2015.

The year over year increases in deal activity and capital invested are refreshing given the muted levels of M&A activity this year. Middle market exits in June were relatively flat year over year and capital exited actually decreased by 35% when compared to last year reflecting the overall weakness in the broader M&A markets that we have experienced in the first half of 2016. 

Looking forward, we don’t yet know the degree to which transaction activity will be impacted given the number of risks on the horizon including the impact of Brexit and the U.S. elections in November.

That said, we are seeing signs of increasing M&A activity and growing pipelines at both the investment banks and private equity firms. High quality targets will continue to attract attention from financial and corporate investors and valuations will remain at heightened levels as long as leverage remains readily available. As multiples remain at elevated levels for quality assets, financial buyers must immediately look to areas for improvement in these assets to justify the higher prices.
 
Keep an eye on the credit markets as the impact of Brexit will become clearer in the coming months which we believe will result in a slowdown in European activity through September at the earliest.  In addition, the uncertain outcome of the United States presidential election in November will likely give some investors additional reason to sit on the sidelines. Once the impacts of these risks are behind us, the pace of transaction activity will certainly increase as the waters become less murky.

For more information, please contact Jeremy Swan, a CohnReznick Principal and National Director of the Firm’s Private Equity and Venture Capital Industry Practice, at jeremy.swan@cohnreznick.com or 646-625-5716.


This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

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