What will 2014 look like for mergers and acquisitions? While no one knows what the future holds, I see these three trends continuing:
1. Increased middle-market M&A
Middle-market companies are the primary driver of economic activity in the U.S. With favorable market conditions, expect an uptick next year. A survey by Mergers & Acquisitions showed a positive outlook for 2014; 71% of respondents expect a better year for mid-market M&A than 2013. They identified healthcare, technology, energy, and manufacturing as the top sectors for growth.
Increased M&A activity, especially in the middle-market, is an indicator of an improving economy. Executives are more likely to make deals when they are confident in the economy and the markets.
2. Healthcare consolidation
The Affordable Care Act has massive implications for the healthcare industry, but no one can say for certain what those implications are. Amidst all the uncertainty, the healthcare industry is seeing a significant amount of reshuffling, led by two big hospital consolidations this summer. We’ve also seen the rise of new products and services like private health exchanges. Look for this trend to continue in 2014 resulting from healthcare regulations.
“Acqui-hiring” refers to recruiting a team of employees by buying a company. This is often the easiest way to attract top talent. For example, under CEO Marissa Mayer’s leadership, Yahoo! has acquired 30 companies for their technology as well as for their talented engineers. With their latest acquisition of PeerCDN, Yahoo brought on three new engineers. Other recent acquired companies like EvntLive and Ptch will be shut down, with the employees joining Yahoo’s team.