The rise of US M&A

After a number of slow years, US M&A has returned with a bang in 2014 as cash rich buyers have returned to a market, fuelling an explosion of high value deals.

The big winners this year have been mid-market business owners, as both corporate and financial buyers have continued to shun larger deals in favour of middle market opportunities which pose reduced levels of risk and greater ease of integration.

2014 has seen deal values return to their highest levels in five years, rising a third in comparison to the same period 2013, and inbound M&A activity has reached its highest level since the last industry boom witnessed in 2007.

Market forces have converged throughout the year to create what could be described as the “perfect storm” with regards to deal making. On the back of a growing economy, along with rising corporate and shareholder confidence, attention is turning from cost cutting and restructuring to growth and long-term strategy.

Corporates and private equity firms backed by large sums of unspent cash and heightened pressure to invest in order to realise their growth strategies have entered the market in a big way, having been willing to part with greater sums of cash to obtain their primary targets.

These factors that have underpinned the resurgence of US M&A look set to remain in place to continue supporting M&A through 2015. With a positive outlook for the US economy breeding more confidence among corporates and private equity firms, coupled with an increasing volume of companies being placed on the market as more and more baby boomer business owner retirees and opportunistic owners seek to capitalise on the positive M&A conditions, the 2014 M&A explosion could turn out to be a mere spark in comparison to 2015.

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