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The Heat Continues for M&A

By August 24, 2014Newsletters

In Ancient Rome, the hot & humid summer days in July and August became associated with the “dog star” (Sirius), the brightest star during these months in the Canis Major constellation. Believing that this star was the cause of the hot weather, the term “dog days of summer” formed and to this day is used to describe these brutal months.

This year, however, the Northeast did not experience any heat from the “dog days of summer,” and the M&A market did not experience its typical cooling through July and August. From our deal origination, consulting, and executive search businesses, we have seen no real reduction in activity. Through mid-August, the M&A heat continues.

This leads to the question, “What happens after Labor Day?” when everyone returns from summer schedules and focuses on last minute efforts to hit 2014 budgets and to develop the 2015 plan.

Looking at recently released data from various agencies, the message is mixed:

  • University of Michigan Preliminary Index of Consumer Sentiment, published August 15, 2014, was at a nine-month low of 79.2, more negative than sentiment during the great freeze of the winter of 2014
  • The July Industrial Production Report, also published on August 15, 2014, showed a continuous sixth-month climb, with the July 2014 results up 5% over 2013
  • On August 14, the Department of Labor published the seasonally adjusted initial unemployment claims for the week of August 9. The figure was 311,000, an increase of 21,000 from the previous week’s revised level
  • Also from the Department of Labor report and for the week ending August 2, the largest increases in initial claims were in South Carolina (+982), Pennsylvania (+853), Michigan (+782), Iowa (+681), and Kansas (+440), while the largest decreases were in California (-9,244), Tennessee (-1,090), New York (-1,063), Oregon (-967), and Georgia (-638)

Based on the data, we believe that the stars are lined up for M&A and B2B trade through the end of the year, while the consumer market remains questionable; the calendar, with an early Labor Day (September 1) and a late Thanksgiving (November 27), may mix with current consumer sentiment to temper retail sales as we move through the fourth quarter.

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