Philadelphia regional M&A update: Q3-2016

M&A activity

M&A in the Philadelphia regional market followed the national trend in the third quarter of 2016 (Q3-2016) with the number of closed transactions increasing by approximately 19 percent from the prior quarter from 113 to 135. The 135 closed transactions in Q3-2016 represent a 31 percent decrease from the same period in 2015. Year to date, 2016 continues to lag 2015’s strong M&A numbers with 379 reported closed transactions vs. 595 for the first three quarters of 2015, a decline of approximately 36 percent, which is above the national decline in number of middle market M&A transactions of 16.5 percent through September.

Large scale M&A headlines have begun to dominate that national press with the recent announcements of transactions between AT&T and Time Warner ($85 billion) and Qualcomm and NXP Semiconductor ($39 billion). Closed transaction values in the Philadelphia regional market trended up in Q3-2016 to $9.3 billion from the low levels seen in the two prior quarters ($0.7 billion and $3.4 billion, respectively) due in large part to two transactions accounting for nearly $6.0 billion of the aggregate value.

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

M&A activity by industry

The consumer sector led the Philadelphia region’s M&A activity with 24.8 percent percent of the total deals announced in Q3-2016. Information technology and healthcare were second and third with 20.0 percent and 17.6 percent, respectively. Industrials, financials, materials and energy accounted for the remainder of the transactions representing 13.6 percent, 13.6 percent, 6.4 percent and 4.0 percent, respectively.

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

Philadelphia regional middle-market M&A activity

There were sixteen middle-market transactions with reported values that closed during Q3-2016, up from four during Q2-2016. Q3-2016 also marked a decrease of 16 percent from 19 middle-market deals with reported values for the same period in 2015.

Philadelphia regional middle-market M&A activity:
Average transaction size

The average transaction size of $66.3 million for the 16 middle-market deals with reported values in Q3-2016 was a $29.7 million increase from the average transaction size of the four middle-market deals with reported values in Q2-2016, and the fourth highest average value over the last 16 quarters.

Source: S&P Capital IQ and Baker Tilly Capital research, Sept. 2016
Middle-market is defined as transaction values between $10 million and $200 million.

Buyers and targets by location

As presented below, the largest number of buyers and sellers were located in the Philadelphia and Southeast Pennsylvania areas during Q3-2016.

Buyer by location

Seller 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; Southeast Pennsylvania: 189, 193, 194; South Jersey: 078, 079, 080, 081, 082, 083, 084;

Trenton: 085, 086, 087

Notable Q3-2016 closed Philadelphia middle-market deals >

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

View the full Philadelphia regional M&A update >

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