What Do Mega Deals Mean for the Middle Market?

It’s been a hot year for mergers and acquisitions with a record $2.5 trillion in deal value announced in the first six months. At least 36 deals over $10 billion in value and 81 deals valued over $5 billion were announced in the first half of 2018. Mega deals are on the rise and driving up the value of global M&A activity.

While middle market activity remains robust, we are seeing a slight downturn in the number of deals under $500 million in size and deal value has remained flat. This means that even in the middle market there are a higher number of larger deals taking place.

Unlike overall mergers and acquisition activity, which has been shaped by the upturn (and downturn) of mega deals, middle market activity has remained steady throughout the past few years. Look at the charts below and you’ll notice the middle market doesn’t face the same large spikes as the overall market.

Global Mergers & Acquisitions 1H 2018MIddle Market M&A 1H 2018

What does this mean for you? Given historical trends, and today’s environment, activity will likely steadily gain traction over the next six months through 1H 2019. Especially in the US the pipeline for middle market and smaller deals remains full as the average age of small business owners continues to increase. Many of these owners who are baby boomers will exit either by passing the business on to the next generation or by selling to a strategic acquirer or private equity firm.

While large transformational mega deals are fascinating to watch and may impact your industry and customers, there is still plenty of opportunity in the middle market for leaders seeking growth through strategic deals.

Photo Credit: Berit Watkin via Flickr CC BY 2.0

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