Central Pennsylvania regional M&A update - First quarter, 2016

Economic and market data

Unemployment in the Central Pennsylvania region was estimated at 4.9 percent for the first quarter 2016, below the national rate of 5.0 percent. The Central Pennsylvania region unemployment rate was 0.6 percent lower than it was in the first quarter of 2015.1

The US equity markets experienced mixed performance in Q1-2016, as the S&P and DJIA close up 0.8 percent and 1.5 percent, respectively; while the NASDAQ closed down 2.7 percent for the quarter. The first quarter market results showed a large degree of volatility with market sentiment being driven by both political and economic uncertainties related to the US political cycle and softening macro growths expectations.

M&A activity

There were 22 reported M&A transactions that closed during Q1-2016. Activity decreased from 50 transactions during Q4-2015. Q1-2016 also marked a decrease from 45 deals closed for the same period in 2015.

The aggregate deal value of the M&A transactions with reported values was $7.4 billion during Q1-2015, the bulk of which was attributable to the $5.5 billion acquisition of Sirona Dental Systems by DENTSPLY International. This is an increase from the total deal value of $1.7 billion in Q4-2015 and an increase from $2.3 billion in Q1-2015.

Central Pennsylvania regional M&A activity: Aggregate transaction size and number of deals

Source: S&P Capital IQ and Baker Tilly Capital research, April 2016


M&A activity by industry Q1-2016

The Consumer sector led the regional M&A activity with 27.3 percent of the total deal that closed in Q1-2016. The Industrial and Healthcare sectors each accounted for 22.7 percent of the total deal flow for the period; while the Utilities sector, the Financials sector, Information Technologies sector, and the Energy sector constituted remainder of the transactions representing 13.6 percent, 4.5 percent, 4.5 percent, and 4.5 percent, respectively.


There were three middle-market transactions with reported values that closed during Q1-2016, down from eight during Q4-2015. Q1-2016 also marked a decrease of 70 percent from 10 deals for the same period in 2015.

Central Pennsylvania regional middle-market M&A activity: Aggregate transaction size and number of middle-market deals

Source: S&P Capital IQ and Baker Tilly Capital research, April 2016
Middle-market is defined as transaction values between $5 million and $250 million.

The average transaction size $104.1 million for the three deals with reported values in Q1-2016, which was a $76.5 million increase from the average transaction size of the eight deals with reported values in Q4-2015.

Central Pennsylvania regional middle-market: Average size of deals with reported value

Source: S&P Capital IQ and Baker Tilly Capital research, April 2016
Middle-market is defined as transaction values between $5 million and $250 million.


Buyers and targets by location

As presented below, the largest number of buyers were located in the Lehigh Valley area during the first quarter of 2016, while the largest number of entities acquired were located in the Harrisburg and Lehigh Valley areas.

Buyer by location

First three numbers of zip codes included in each region, as categorized by S&P Capital IQ: Altoona—166,168; Harrisburg – 170, 171, 172, 178; Lancaster – 173,174,175,176; Reading – 179; Lehigh Valley – 180,181,183; Williamsport – 197,177.

Target by location

First three numbers of zip codes included in each region, as categorized by S&P Capital IQ: Altoona—166,168; Harrisburg – 170, 171, 172, 178; Lancaster – 173,174,175,176; Reading – 179; Lehigh Valley – 180,181,183; Williamsport – 197,177.

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1Source: BLS.gov (Data is not seasonally adjusted.)

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