This year-end 2016 M&A Watch reviews macro-economic indicators that effected 2016 strategic transactions, middle market metrics and other deal related facts. We finish with thoughts about what business owners and investors need to know to successfully execute M&A and strategic transactions in 2017.

This year-end 2016 M&A Watch reviews macro-economic indicators that effected 2016 strategic transactions, middle market metrics and other deal related facts. We finish with thoughts about what business owners and investors need to know to successfully execute M&A and strategic transactions in 2017.

Middle Market M&A deal volume experienced a decline in Q3 2016, compared to Q2 2016 as well as the same period last year (-19.6%). This decline appears to be unrelated to M&A related indicators such as cost of capital and the strength of corporate balance sheets and is driven more by macro-economic uncertainty of a tumultuous U.S. presidential election. Different candidate policies related to taxes, foreign policy, trade and the overall economy are likely causing some buyers to sit on the sidelines for now. Once the elections are behind us, expectations are that momentum will increase, so long as the macro-economic fundamentals remain favorable.

Middle Market M&A deal volume experienced a decline in Q3 2016, compared to Q2 2016 as well as the same period last year (-19.6%). This decline appears to be unrelated to M&A related indicators such as cost of capital and the strength of corporate balance sheets and is driven more by macro-economic uncertainty of a tumultuous U.S. presidential election. Different candidate policies related to taxes, foreign policy, trade and the overall economy are likely causing some buyers to sit on the sidelines for now. Once the elections are behind us, expectations are that momentum will increase, so long as the macro-economic fundamentals remain favorable.

Middle market M&A transaction volume seems to have settled at a more “normal” level for the first half of 2016. The blistering pace of 2015 was not sustainable and there was certainty that 2016 would be down, but the question was, “how much?” especially given the chaos of Brexit, acts of terrorism and the almost circus-like craziness of the political season. These events have failed to curb the middle market’s appetite for strategic transactions. Q2 2016 transaction volume seems to be relatively consistent with the very healthy pace of Q1 2016.