M&A Report 2017 Q1

As Reported By PitchBook Data, Inc.

Strong Stock Market Performance and Perceived Stability Pushed US M&A Multiples Even Higher in Q1

While Europe faced a slowdown amid political and financial uncertainty, investors in the US were giddy about the possibility of corporate tax cuts and infrastructure bills. Though those initiatives now seem further from fruition, there is still plenty to be excited about. Q1 2017 S&P 500 earnings growth is expected to be 9.2% year over year, according to FactSet.

North America saw a quarterly decrease in median EV/EBITDA (enterprise value/earnings before interest, taxes, depreciation and amortization) multiple, from 10.1x to 9.8x, however, if you exclude deal flow in Mexico and Canada, the trend is reversed. The median EV/EBITDA multiple for the US jumped from 10.2x in 4Q 2016 to 10.9x in 1Q 2017.

The US is still seen as a bastion of stability compared to Europe and emerging markets. While the European Central Bank continues its program of quantitative easing, the Fed has proceeded with its long-anticipated, albeit modest rate hikes. This course of action has kept financing incredibly cheap for corporate and financial sponsors, while also giving them confidence that the economy has a better chance at returning to a more normal credit environment.

For more information about M&A activity within a particular sector, please contact Gregg Schor at 631.285.3172, or GSchor@ProtegrityAdvisors.com.