Citizens Commercial Banking’s fifth-annual Middle Market M&A Outlook shows more than half of mid-sized U.S. companies are looking for transformative deals to help them jump-start revenues in the stabilized, but slow-growing U.S. economy.

The study takes an annual look at the appetite for mergers and acquisitions among middle market companies – companies with annual revenue between $5 million and $2 billion – that are key creators of jobs and drivers of economic activity in the U.S.

Among the larger companies surveyed, with annual revenue between $25 million and $2 billion, 59% said they are looking for transformative deals. More than half of smaller firms surveyed, with annual revenue of $5 million to $25 million, also are looking for deals, with 53% saying they are on the hunt.

Citizens Middle Market M&A Outlook, now in its fifth year, provides insight into the behaviors, attitudes and perceptions of business owners and CEOs as they consider their corporate development strategies for the year ahead. Other key findings from this year’s survey include:

• Among upper middle market firms, 32% are currently involved in an acquisition and another 31% are open to considering one.
• Fifty-four percent of upper middle market potential buyers say they are more confident today than they have been in the past that growth through outside investment is an appropriate strategy.
• Top concerns among buyers are “inherited liability” and “overpaying for an acquisition.” Smaller middle market firms are also worried about losing key employees during an acquisition, while larger firms are worried about market fluctuations that could impact deal values.
• Eighty-three percent of upper middle market potential sellers report that they have been either extremely (25%) or moderately (58%) impacted by volatility in the global economy.
• Forty-one percent of upper middle market potential sellers fear a significant financial crisis in the next three years.
• Top reasons for selling are to provide liquidity for owners and to take advantage of current market value. Forty percent of lower middle market owners also cite “fatigue.”
• The greatest worry among middle market sellers is being underpaid for their firms.
• Fifty-six percent of upper middle market sellers say they believe asset valuations will stay the same (42%) or even decrease (14%) over the next year.
• Both buyers and sellers in the middle market turn to external advisors such as commercial bankers for a range of M&A services such as valuation, opportunity assessment, due diligence, strategy and financing.