United States

Q1 2017 Business Products and Services Industry Spotlight

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Year-over-year figures remained down in both value and volume. Globally, mergers and acquisitions (M&A) volume slid by 43 percent year over year, while value plunged by just under 60 percent. In North America, activity dropped by nearly 38 percent relative to Q1 2016 and aggregate value dropped 68 percent. As has been the case in quarters past, there continues to remain a limited number of quality companies available in the market. However, within the business products and services (B2B) industry, the pipeline is refilling; middle market private equity (PE) buyout shops are raising new funds and preparing to tackle even more operationally challenged, unbanked businesses within the lower middle market. Deal sourcing and grappling with the relatively expensive environment has led to greater innovation and diversity in the approaches PE buyers are adopting.

The initial public offering (IPO) window may be more open now than at any time last year. Of the four B2B IPOs completed in the United States in Q1 2017, all were of companies backed by PE firms.  With this resurgence comes market participants’ nervousness around the lack of palpable market reactions to events that have historically sparked volatility. This in turn could continue to discourage all but the most intrepid of prospective listers.

 

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