Deal value increased for Q1:14, yielding total middle-market deal value of $66.9 billion — the highest for the first quarter since 2008.
At 506, the number of completed middle-market deals in the first quarter dropped to the second-lowest level it has been in five years, ahead of only the first three months of 2012, which produced 487 completed transactions worth $1 billion or less.
March reported the highest level of early-stage deal flow seen in six months, according to the Mid-Market M&A Conditions Index (MACI). Dealmakers also predicted activity will increase significantly over the next three and 12 months, as demonstrated by the positive sentiment expressed in the Mergers & Acquisitions Mid-Market Pulse.
One sector that produced significant dealmaking activity in the first quarter is oil and gas. The quarter saw Atlas Resource Partners LP’s (NYSE: ARP) January purchase of a natural gas reserve that was being shopped by GeoMet Inc. for $107 million, followed by Regency Energy Partners LP’s (NYSE: RGP) February purchase of Hoover Energy’s Midstream assets for $290 million. Encore Energy Partners (NYSE: ENP) also completed a deal in February when it spent $549.1 million on assets sold by Anadarko E&P Onshore LLC.
M&A in the health care sector is expected to outperform the overall market, according to results from the MMP. In the financial services sector, New York Life Investment Management sealed a $511.9 million deal in early February for the fund management unit of Franco-Belgian lender Dexia SA after the two companies entered exclusive talks in September 2013. Private equity firm the Riverside Co. grew portfolio company Paradigm Tax Group on several occasions throughout the first quarter. The firm bought Pence & Associates, headquartered in Kansas City, Mo., to strengthen the tax group’s Midwest presence, for an undisclosed price. That deal followed two others in January, where Riverside bought AVS Tax Inc. and Hart Property Consultants, folding each into Paradigm.