GCG’s Q4 2019 Middle Market Update provides an overview of the latest trends in the market, including recent performance of select sectors and the state of the middle-market M&A environment.
Key findings include the following:
- GCG’s proprietary middle market industry sector performance index has shown mixed results by industry. In total, the middle market performed significantly below the performance of large cap stocks as measured by the S&P 500 index.
- The Automotive middle market sector had the strongest performance of any industry over the past 12-months with a stock performance gain of 8.8%. Other positive industry sectors include Real Estate and Aerospace & Defense (“A&D”). Conversely, the Healthcare and Industrials & Manufacturing sectors among others dropped during the same 12-month period. There were many undercurrents in the market during 2019 in addition to the continued under-performance of the middle market stocks compared to larger cap stocks. This trend has remained consistent over the last 12-months.
- Middle market public and private company transaction deal volume and value declined in Q4 2019 from the previous quarter. 2019 total middle market deal value was also 5% lower than 2018. This is likely due to the increase in uncertainty surrounding the US-China trade war and increased geo-political tensions. However, the underlying financial metrics of the market are still very strong and favorable for M&A activity.
- Q4 deal activity continued to show strength in the middle market Consumer Discretionary sector. This industry was responsible for 22% of the 2019 overall middle market M&A activity compared to 17% in 2018. Other sectors, including Communication Services and Healthcare, experienced the largest declines.
Click here for the full update.