The report, conducted in late 2013 and the third such endeavor by RBS Citizens, surveyed 460 U.S.-based executives who are open to or currently engaged in some sort of corporate development activity, including mergers, acquisitions and raising capital. With a sense of stability returning to the economy middle market companies remain open to buying or selling but are prioritizing opportunities to re-invest in their existing operations.
“Our latest survey indicates that the appetite for acquisitions and sales remains strong, but businesses are taking a more strategic, less urgent approach, which reflects a strengthening economy,” said Bob Rubino, EVP and head of corporate banking and capital markets for RBS Citizens. “As more middle market companies see top-line growth, owners are looking for strategic sales or acquisitions that can augment their re-investment strategy and help keep their momentum going.”
These findings mirror other reports that suggest that critical sectors of the U.S. economy such as healthcare, retail food and energy will see continued or renewed M&A activity in 2014, according to business leaders at CIT Group. The middle market is ripe for a more fruitful M&A environment in 2014, according to Thomson Reuters LPC. The persistent fog of economic and political uncertainty that has stymied investment is lifting, giving way to improved visibility for lenders, borrowers and private equity sponsors alike. Increased economic confidence, more certainty with respect to Fed tapering, and fewer concerns about future government budget stalemates are paving the way for greater willingness to buy, sell and invest in middle market companies.
If in recent quarters companies were primarily focused on cost savings, they are shifting their attention to strategic growth opportunities. There is an abundance of capital – in the hands of both debt and equity investors – waiting on the sidelines, which will help buoy M&A activity.
In late 2013, RBS Citizens conducted a survey of 460 U.S.-based middle market business executives that are open to or currently engaged in some form of corporate development activity, including mergers, acquisitions, and raising capital in the New England, Mid-Atlantic and Mid-West regions. For the purposes of this survey, middle market businesses have annual revenues of between $5 million and $2 billion.
Based on this year’s survey results, the proportion of current and potential sellers in the market remains unchanged since 2012, but their motivations and intentions have shifted.
While fewer acquisitions were in process at the end of 2013 than in the year before, deals this year are expected to be larger and more strategic.
Given the complexity of an M&A transaction, from ensuring proper valuation to identifying the best strategic buyers or acquisition targets, the process has become more labor-intensive. Most companies without an experienced internal team are relying on an outside advisor.
Read: citizensbank.com.
Read: https://www.reuters.com/article/2014/01/15/mid-market-outlook-idUSL2N0KP13S20140115
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