M&A activity appears to be off to a record year. Dry powder, high valuations, and high competition — the factors that were supposed to have driven activity years ago — have finally found traction. Although the activity has been led by large corporate deals, the effects are beginning to ripple through the entire spectrum of markets.
To better understand the major areas of activity in Q2’14, we analyzed deal flow and investor interest in six of the primary industries on the Axial network. Download all 6 tearsheets here, or view industry-specific ones below:
The Consumer sector is the largest on Axial, with 773 Opportunities shared on the network in Q2’14. Despite the large size, both deal flow and investor interest remained fairly steady quarter-over-quarter. The related Retail sector, however, saw gains in both deal flow and investor interest.
Health Care & Life Sciences
If you are looking for Health Care Services businesses, deal flow has been robust. For two consecutive quarters, the Health Care Services industry has been leading deal flow in the sector. However, investors seem to be more interested in Managed Health Care and Health Care Distributors Opportunities.
While quarter-over-quarter deal flow remained flat in the Business Services sector, investor interest inched up. The most number of Opportunities came to market in the Diversified Support Services industry, followed closely by the Environmental & Facilities Services industry. The greatest investor interest was in Airport Services.
Energy is the most in-demand sector this quarter, with an average pursuit rate of 9.2%. This demand, like quarters past, has largely been driven by opportunities in the Oil & Gas industries. Amidst this demand, overall Energy deal flow fell 7% from Q1’14 to Q2’14. Oil & Gas Storage & Transportation, in particular, saw an exceptional growth in deals this quarter — a nearly 120% increase in Opportunities brought to market.
Technology, Media, Telecom (TMT)
After a slowing in Q1’14, investor interest has rebounded in Q2’14 to reach highest levels in the past year. Following closely behind Energy, TMT had an average pursuit rate of 9.1%, making it one of the most demanded sectors on Axial in Q2’14. Application Software remained the area of greatest deal flow, while Integrated Telecommunication Services garnered most of the investor attention.
Industrials & Manufacturing
Another large sector on Axial, the Industrials & Manufacturing sector had nearly 700 Opportunities brought to market in Q2’14. Construction & Engineering led the deal flow, followed closely by Industrial Machinery & Equipment. Investors, however, seemed to have their eyes set on Aerospace & Defense. After many of the uncertainties around the sequestration were resolved last year, investors continued to heavily pursue the industry.