Market Commentary

Published on: 10/01/2019
By conventional wisdom, transportation leads other segments as a forward-looking indicator of economic cycles. If that holds true this go-around, the news is not good. In fact, a quick skim through transportation trade publications is downright worrisome.
Published on: 06/06/2019
M&A activity for middle market companies remained robust in Q1 of 2019 as transaction volume increased slightly over the prior year. The record level of private equity fundraising over the last few years is a driving force in the M&A market as private equity buyer activity continues to set new highs.
Published on: 03/14/2019
The humming economy in 2018 saw impressive gains, driving 3.1% GDP growth, bringing the unemployment rate down to a near 50-year low of 3.7%, and accelerating job creation to 2.6 million.
Published on: 11/28/2018
With all of this talk of tuck-ins, you’d think that private equity pros across the middle market were obsessive bed-makers. In the past two years, private equity firms have taken advantage of a period of elevated valuations to harvest investments made following the financial crisis of 2008-2009, selling companies at a faster rate than they are buying. Of course, many of these sales are to other financial sponsors.
Published on: 08/29/2018
There is no question that the M&A market is white hot. Amidst the longest period of economic expansion in US history, the M&A market has been bolstered by cash-rich companies, cheap and easy access to acquisition financing, significant amounts of private equity (PE) dry powder, and strong optimism in the US economy. The National Federation of Independent Business (NFIB) watched the Small Business Optimism Index rise to 107.9 in July—the second-highest level in history, falling within 0.1 point of the July 1983 all-time high.
Published on: 05/23/2018
It sure feels like behind-the-scenes transaction activity is at very high levels!  We expect to see a jump in deal announcements in the months ahead.  While Q1 volumes were a bit down, we see that as a brief lull in an otherwise active market.  Multiples and leverage levels remain at historically robust levels.  The expected surge in activity is driven by improved performance fundamentals at companies of all sizes.
Published on: 04/30/2018
Stable and Strong:  Quality Premiums Abound Despite what feels like a volatile start to the year in public equity markets, middle market valuations remain quite firm following another very strong year in 2017.  Deal volume has tapered off a bit as the bull market in M&A matures.  However, demand remains robust, especially from PE buyers.  The average multiple paid by PEGs climbed 17.4% year-over-year, from 6.9x to 8.1x.   
Published on: 11/29/2017
Seller’s market leaves buyers fighting for the prize. The ripe economic environment in 2017 has created a vibrant seller’s market with companies achieving premium EBITDA multiples of approximately 9.1x.  Although Q3 YTD deal volume dropped 16.2% year-over-year, it is Capstone’s view that the decline is attributable to fewer companies available for sale rather than a lack of buyer demand.
Published on: 09/01/2017
Private equity (PE) groups have amassed a fortune in dry powder, cash reserves meant to purchase assets in the future, and have buoyed the market despite slowing deal volume.  According to Pitchbook, PE groups currently have $545.5 billion in dry powder and have increasingly used it to make acquisitions.  PE deal volume is 17% higher than it was this time last year and is on pace to reach the record levels of 2015 and 2014.  The positive effect of PE activity has helped to boost valuations to reach an average of 9.4x EBITDA, even as overall middle market deal volume decreased
Published on: 05/23/2017
While there was a slight pull back in deal volume, middle market deal activity remained healthy in Q1 2017; a trend that is expected to remain over the next twelve months. Surrounded by a bullish stock market, rising levels of consumer confidence and global uncertainty, the US has been a safe haven for the acquirers of businesses. News From the Middle Podcast Ted Polk, a Capstone Managing Director, discusses the middle market M&A environment.