Daily News: January 14, 2015

Citizens: Middle Market M&A Outlook Shows Warming Economy

Citizens Commercial Banking’s fourth annual Middle Market M&A Outlook shows corporate buyers are no longer content to “sit on the fence” as an improving economy has given executives more reasons to either make strategic acquisitions or stay the course and focus on organic growth.

A quarter of the middle-market executives surveyed said their firms are currently involved in acquiring another firm, up from 17% last year. For middle-market companies with annual revenue between $100 million and $2 billion, the percentage is even higher: 46% are involved in a purchase, compared to 30% last year.

“Our 2015 survey indicates that the appetite for acquisitions and sales has increased since last year,” said Bob Rubino, executive vice president and head of Corporate Finance and Capital Markets for Citizens Commercial Banking. “Many owners are looking for strategic acquisitions that can help them grow. Buyers are no longer sitting on the fence. This is consistent with what we’ve seen with the increasing number of Citizens Commercial Banking customers that currently are actively engaged in M&A activity.”

Other key findings from this year’s survey include:

  • The main reason for making an acquisition – cited by 73% of companies – is to increase revenue.
  • The top two reasons for selling are to provide liquidity to owners (47%) and to take advantage of the market value of the firm (45%).
  • The top reasons for considering international M&A are: access to new markets (40%), lower operating costs (40%) and lower labor rates (36%).
  • The percentage of middle-market companies currently raising capital is up from last year with the largest increases coming from companies with revenues above $25 million.