SourceMedia’s Mid-Market Pulse Index Suggests Energy Sector Peak Has Passed
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According to the fifth report in SourceMedia's Mid-Market Pulse (MMP), dealmakers expect M&A in the energy section to fall behind the overall market and other high-growth sectors such as healthcare and financial services over the next 12 months. The MMP, published by Mergers & Acquisitions in partnership with
"Dealmakers expect M&A in the energy sector to grow over the next year but at a slower pace than the overall market and other high-growth sectors," said
The 3-month composite score for energy was 68.5, considerably lower than the index's overall 3-month composite score of 75.1. The 12-month outlook was similar with energy delivering a composite score of 67.7 compared to the overall composite reading of 70.8.
Each month, the MMP index spotlights an individual industry and presents respondents' expectations for deal activity within that specific sector. This month's index focuses on the energy sector.
Deal multiples showed the least growth of components in the energy sector, according to Flynn. Deal multiples scored a 57.4 in the 3-month outlook and 51.3 in the 12-month forecast. "The relatively low scores for deal multiples suggest that deal prices in the energy sector are flattening out after having risen over the last couple of years," Flynn said.
For a complete analysis of the MMP's most recent data, go to: http://www.TheMiddleMarket.com/mmp-TMT.
Inside the MMP
The Mergers & Acquisitions Mid-Market Pulse (MMP) is a monthly barometer of sentiment in the mergers and acquisitions business derived from monthly surveys of approximately 250 executives in private equity firms, investment banks, lenders, and advisory firms in accounting, law, and consulting.
Based on a regular set of recurring questions about expectations and trends across a range of key issues in M&A, the MMP is a leading indicator for potential changes in momentum in M&A activity. Various indicators that make up the MMP include projected deal volumes and pricing, staffing resource utilization levels, and the expected impacts of economic conditions, taxes and regulatory policy on future M&A activity.
Survey responses describe expectations and outlooks for three- and 12-month forward periods to arrive at indicator scores. Respondents also are asked to elaborate on their responses and provide opinions about other conditions that affect their M&A outlook.
A Look at the Numbers
In the near term, the energy sector scored higher than the overall market in two components: economic impact and tax impact. In deal value, energy sector fell short of the overall market, registering 70.9 compared to 79.2.
The longer view for the sector was more dismal as no components in energy scored higher than the overall market.
What Respondents are Saying
Survey respondents are encouraged to add verbatim comments to their answers. Many said oil demand, the economy and global instability will affect the energy sector.
One respondent worried about "the volatility in global oil prices" while another cited "geopolitical developments".
"A combination of increased regulatory scrutiny and uncertainty in certain parts of the world will negatively influence activity and valuations in the energy sector," one dealmaker said.
Others are holding on for "new forms of energy and new technology."
About SourceMedia
SourceMedia, an
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About Mergers & Acquisitions
Mergers & Acquisitions covers all aspects of middle-market dealmaking, including identifying acquisition targets, negotiating transactions, performing due diligence, and closing deals. Serving nearly 18,600 print subscribers, our monthly magazine is published in partnership with the
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