Could M&A Slow Down?

A minority of investors have expressed concerns that midmarket activity may actually slow down in 2014, compared with 2013 activity levels.  Growth in the middle market may plateau for a few reasons all of which hinge on uncertainty in the economy including sequestration and the ongoing open-discussion over the U.S. debt ceiling. Health-care reform costs and talent gaps may also contribute to a slowdown in 2014.

According to a survey conducted in Q3 2013 by the National Centre for the Middle Market (NCMM), middle-market companies (generating between $10 million and $1 billion), in revenue can expect slower expansion over 2014 as revenue and employment growth are expected to slow over the next year.  This quarterly survey took responses from 1,000 C-level executives. The responses showed that on average revenue is expected to grow at a lowered rate of 4.4 % through the next year compared with the 5.1 % estimated from the previous quarter. Additionally, only 61 % of the middle-market executives surveyed said they would invest an extra dollar if presented with that opportunity as compared with 64 % last quarter.  Furthermore, the survey found that hiring among midmarket companies is expected to grow only 2.1 % over the next year, a drop from the 2.5 % predicted last quarter.

This post is part of a series addressing current and expected viewpoints on M&A from across a number of professionally relevant sources. 

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Photo Credit: flrnt via Flickr cc