U.S. Middle Market, Q2/2017: Slower Growth, Sustained Appetite for M&A

Posted By: Karen Fisman

Why, with our focus on Canadian mid-market M&A, are we writing about the U.S. Middle Market?

U.S. middle market companies[1] generate 33% of U.S. private sector GDP, and as such, represent a significant economic force.  According to a recent survey conducted by the National Center for the Middle Market, 38% of middle market firms expect to engage in an M&A transaction over the next twelve months, motivated in large part by a desire to add new markets and customers.   Additionally, there is an expectation that increased revenues will be generated outside the U.S., with Canada identified as one of the top three contributing markets[2].

A healthy U.S. middle market with an appetite for growth through outbound M&A is likely to impact our Canadian deal activity, particularly when we layer on the discount attributed to Canadian company valuations relative to their U.S. counterparts.

So now that we’ve established why we care, let’s discuss U.S. Middle Market Q2 performance, which comes on the heels of a record setting first quarter. 

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[1] As defined by the National Center for the Middle Market

[2] In a recent (post-election) Deloitte’s survey of U.S. middle market companies, more than half of respondents reported this expectation.

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