Philadelphia regional M&A update - First quarter, 2016

Economic and market data

The preliminary unemployment rate in the Philadelphia region was estimated at 4.8 percent for February 2016, slightly below the national rate of 5.0 percent. The Philadelphia region unemployment rate had decreased 1.0 percent from 5.8 percent in the first quarter of 2015.1

The first quarter of 2016 (Q1-2016) showed mixed performance for the broader US equity market, as the S&P and DJIA closed 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 reflected significant 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 132 reported M&A transactions during Q1-2016, down from 187 transactions during Q4-2015. Q1-2016 also marked a decrease of 36 percent from 207 deals for the same period in 2015.

The aggregate deal value of the M&A transactions with reported values was $3.5 billion during Q1-2016, a dramatic decrease from the total deal value of $78.9 billion in Q4-2015 and $57.4 billion in Q1-2015.

Philadelphia regional market M&A activity: Aggregate transaction size and number of deals

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


The Consumer sector led the Philadelphia region’s M&A activity with 25.8 percent of the total deals announced in Q1-2016. Information Technology and Healthcare were a close second with 21.1 percent. Industrials, Financials, Materials, Energy and Utilities accounted for the remainder of the transactions representing 15.6 percent, 8.6 percent, 4.7 percent, 2.3 percent, and 0.8 percent, respectively.

M&A activity by industry Q1-2016


There were eighteen middle-market transactions with reported values announced during Q1-2016, down from thirty-eight during Q4-2015. Q1-2016 also marked a decrease of 65 percent from fifty-two deals for the same period in 2015.

Philadelphia regional middle-market M&A activity

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

The average transaction size of $80.7 million for the eighteen middle-market deals with reported values in Q1-2016, was a $40.9 million increase from the average transaction size of the thirty-eight deals with reported values in Q4-2015, and the second highest average value over the last seventeen quarters.

Philadelphia regional middle-market average transaction size

Source: S&P Capital IQ and Baker Tilly Capital research, March 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 and sellers were located in the Philadelphia and southeastern Pennsylvania areas during the first quarter of 2016.

Buyer by location

First three numbers of zip codes included in each region, as categorized by S&P Capital IQ: Harrisburg – 170, 171, 172, 178; Lancaster – 173,174,175,176; Lehigh Valley – 180,181,183; Philadelphia – 190, 191, 192; Reading – 179, 195, 196; SE Pennsylvania – 189,193,194; South Jersey – 078, 079, 080, 081, 082, 083 084; Trenton – 085, 086, 087

Target by location

First three numbers of zip codes included in each region, as categorized by S&P Capital IQ: Harrisburg – 170, 171, 172, 178; Lancaster – 173,174,175,176; Lehigh Valley – 180,181,183; Philadelphia – 190, 191, 192; Reading – 179, 195, 196; SE Pennsylvania – 189,193,194; South Jersey – 078, 079, 080, 081, 082, 083 084; Trenton – 085, 086, 087

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