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M&A in business products and services will move in step with economy

Q2 2016 business products and services industry spotlight

INSIGHT ARTICLE  | 

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Coming off of a 2015 that saw the business products and services industry experience flat to minimal growth, 2016 appears set to see a continuation of this, as many of the same pressures that impacted the industry last year remain in place. Unlike other sectors, such as health care, technology or consumer, which can experience fundamental industry shifts, the business products and services sector typically follows the overall market growth trajectory. While companies in the above-mentioned sectors that can spot fundamental industry shifts early can position to outperform and generate substantial growth, business products and services businesses aren’t afforded the same luxury, so addressing headwinds early and planning for a slow-growth environment has remained the focus of companies in the space.

Key highlights from the first quarter:

  • Just 835 transactions closed during the first quarter of 2016, representing a decline of 9.5 percent on a quarterly basis and 18 percent relative to the first quarter of 2015. 
  • Private equity (deal value remained flat relative to the fourth quarter of 2016, with $35 billion worth of private equity-backed mergers and acquisitions (M&A) activity closing during the period. Volume did decline, however, with 291 transactions closing during the period, a nearly 10 percent quarter on quarter drop.

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