Q3 2022 Middle Market M&A Update

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GCG’s Q3 2022 Middle Market Update provides an overview of the latest trends in the market, including the recent performance of select sectors and the state of the middle market M&A environment.

Key findings include the following:

    • The middle market public companies have fared much worse than the S&P 500 over the past year. Based on the GCG index, the middle market public company stock price index has dropped 32 percent over the past year while the S&P 500 index has dropped 17.7 percent. While the Industrials and Manufacturing industry has performed kept pace with the S&P 500 and dropped 18 percent, many of the other industries were off 50 percent or more.
    • PE and Revenue multiples for middle market public companies continue to drop as a result of rising interest rates and overall economic concern. Based on the level of the drop, the market has priced in an earning slowdown/recession into some of the sectors of the middle market.
    • Q3 middle market M&A activity continues at a similar pace to Q2. While deal activity and value have declined from 2021, that was to be expected given the record year in 2021. There continues to be strength in the middle-market M&A market. This strength isn’t always measured by how many deals are done. Quality deals are still highly sought after and values remain robust.
    • As a percentage of the overall M&A market, Technology & IT has dropped significantly year over year going from 17 percent of the overall market during the 3rd quarter of 2021 to 10 percent in the 3rd quarter of 2022. Industrials and Financial firms are 2 sectors that have picked up as an overall percentage of deals.

Click here for the full update.

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