Market Commentary

Q1 2018
Stable and strong: quality premiums abound  Despite what feels like a volatile start to the year in public equity markets, middle market valuations remain quite firm following another very strong year in 2017. Deal volume has tapered off a bit as the bull market in M&A matures.   
Q4 2017
Seller’s market leaves buyers fighting for the prize. The ripe economic environment in 2017 has created a vibrant seller’s market with companies achieving premium EBITDA multiples of approximately 9.1x.  Although Q3 YTD deal volume dropped 16.2% year-over-year, it is Capstone’s view that the decline is attributable to fewer companies available for sale rather than a lack of buyer demand.
Q3 2017
Private equity (PE) groups have amassed a fortune in dry powder, cash reserves meant to purchase assets in the future, and have buoyed the market despite slowing deal volume.  According to Pitchbook, PE groups currently have $545.5 billion in dry powder and have increasingly used it to make acquisitions.  PE deal volume is 17% higher than it was this time last year and is on pace to reach the record levels of 2015 and 2014.  The positive effect of PE activity has helped to boost valuations to reach an average of 9.4x EBITDA, even as overall middle market deal volume decreased
Q2 2017
While there was a slight pull back in deal volume, middle market deal activity remained healthy in Q1 2017; a trend that is expected to remain over the next twelve months. Surrounded by a bullish stock market, rising levels of consumer confidence and global uncertainty, the US has been a safe haven for the acquirers of businesses. News From the Middle Podcast Ted Polk, a Capstone Managing Director, discusses the middle market M&A environment.
Q1 2017
Global economic uncertainty leading up to the US election and fallout from Brexit had a dampening effect on deal volume with the number of transactions completed in 2016 declining 6.2% compared to the near record level of activity achieved in 2015.
Q4 2016
Year-to-date (YTD) through Q3 2016, we have seen a 16% decline in deal volume, largely driven by an unexpectedly quiet Q1.  The always entertaining Presidential Election contributed to interim market volatility and mixed economic sentiment.  The dynamic of an expected Clinton victory fueled a year
Q3 2016
Despite uncertainty in global markets, middle market M&A valuations in the US have remained strong through Q3 2016.  Trump vs. Hillary, Brexit, interest rates, oil prices and Turkey’s failed coup are all forces that have threatened and, more importantly, failed to destabilize markets.  Instead, domestic M&A activity has remained healthy, highlighted by increased EBITDA multiples across industries and transaction sizes, strong average deal valuations, renewed interest by foreign acquirers and continued interest from private equity (PE) and corporate acquirers.
Q2 2016
Microsoft (NASDAQGS:MSFT) acquires LinkedIn (NYSE:LNKD) for $27.6B.
Q2 2016
Salesforce.com (NYSE:CRM) acquires Demandware (NYSE:DWRE) for $2.8B to add e-commerce to its sales & marketing product portfolio.
Q2 2016
Is the M&A music winding down?  Deal volume is off from record setting levels in 2015, which is clear.  Both strategic and private equity buyers have closed fewer deals in Q1 2016 than the previous quarter, following a trend of three straight quarters with a decrease in aggregate volume.

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