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M&A activity keeps pace in 2015

Despite rising rates, dealmaking expected to continue in 2016

More than two dozen deals close every quarter in Central Pennsylvania, according to merger and acquisition activity reports from Philadephia-based consulting firm Baker Tilly Capital LLC.

In some quarters, it’s three or four dozen.

Deal-making conditions were strong in 2015, and that is expected to continue in 2016, said Jason Cunningham, the company’s managing director.

“We saw continued strength in the market and a tremendous amount of capital available to get deals done,” he said. “That’s not going to change heading into 2016, barring some catastrophic macroeconomic event.”

Higher interest rates could compel some buyers to “tap the brakes a little on the M&A market,” Cunningham said. “If we see headwinds in the financial markets, that tends to impact larger deals first.”

BREAKDOWN

Annual M&A in Central Pa.

• 2012: 202 deals

• 2013: 149 deals

• 2014: 151 deals

• 2015 (through November): 132 deals

Quarterly M&A in Central Pa. (2015)

• Q1: 45 deals

• Q2: 30 deals

• Q3: 29 deals

There still will be a lot of money out there to get deals done in the lower end of the middle market, which Baker Tilly primarily tracks. Those are deals between $5 million and $250 million.

“Shareholders are demanding that money be invested to generate an appropriate return,” Cunningham said of what was a challenging year for organic growth in 2015. “Consolidation is a way to drive growth, add talent and additional product capabilities.”

Flat

Array

From a numbers standpoint, closed deals have flattened out. They even dropped in some quarters regionally, according to Baker Tilly.

But the deals announced involve higher-profile companies and the numbers are larger, Cunningham said.

That would include the proposed $17.2 billion sale of East Pennsboro Township-based Rite Aid Corp. to Walgreens Boots Alliance.

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