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 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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