North American Middle Market M&A Update Q4 2018


Market Overview

Valuations remain robust and the outlook heading into 2019 remains favorable 

Strong demand for transactions from both strategic and financial buyers continues to lead to high valuations and favorable deal terms for sellers. A positive macroeconomic environment, an abundance of capital availability and modest deal volumes continue to support favorable valuations for sellers in 2019.

Demand from Private Equity

Accelerating pace of investments from private equity continues to add to total private equity company ownership

Driven by strong growth in capital allocation to private equity, the total number of PE groups and PE assets under management are at all-time highs. As a result, the number of PE-backed companies in the U.S. continues to grow at a near exponential rate. Since 2000, the number of PE-backed companies in the U.S. has increased nearly 5x.

This trend has clearly constrained the supply of investment opportunities for both financial and strategic investors. Further exacerbating the trend, private equity investments are outpacing exits at over 2.1 to 1. With this pace of investment, the total number of U.S. PE-backed companies will continue to grow and reduce the amount of available investment opportunities.

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