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peHUBlogger: AxialMarket’s Middle Market M&A Update

Jaime Romero, a VP with AxialMarket, will weigh in at peHUB.com with the occasional post, applying some of the company’s web-based tools and analytics to a network of qualified buyers and sellers of private companies for our audience. On a quarterly basis, the company aggregates network activity to provide transparency into overall middle market M&A and transaction activity.

Buy-Side Activity

AxialMarket’s members use its tools to establish an online identity and to articulate their acquisition and investment strategies to the investment banking and business owner community across a range of sub-industries, transaction sizes, geographies, and transaction types. Seventy-two buyers joined AxialMarket in the last 90 days; of these, 28 are financial buyers and 44 are strategic buyers.

-Over the last 90 days, 67% of AxialMarket buyers seek to make acquisitions within the Industrials sector, which includes capital goods, commercial & professional services, and transportation & logistics. This is followed by consumer discretionary (55%), where both categories realized a 3 percentage point decline in demand.

-Activity within AxialMarket, as measured by NDAs executed, increased 7% overall across AxialMarket in Q1 2011.

-AxialMarket also reports on the average level of buyer interest per opportunity within each industry sector. Opportunities in the materials sector saw the greatest amount of interest per opportunity on average, with energy in the runner up spot in per unit activity. Both saw a 200% increase over the previous 90 day period.

-Capital goods experienced the greatest amount of NDAs executed, with opportunities in this vertical accounting for over 23% of all buyer interest. Healthcare saw the largest increase in demand, doubling in total NDAs executed over the past 90 days.

-Consumer services saw the largest decline in interest from buyers.

Sell-Side Activity

In the first quarter of 2011, 505 opportunities totaling more than $7B in Revenue and over $800M in EBITDA came to market from 176 unique sellers. This represents a 12% increase in deal activity, a 27% increase in aggregate revenue, and 7% increase in aggregate EBITDA.

-Companies headquartered in the Southeast made up the largest volume of dealflow over the past 90 days, followed closely by companies headquartered in the Pacific and Midwest region of the U.S.

-Twenty-seven percent of dealflow is classified as opportunities within the capital goods sector, which encompasses aerospace & defense, industrial machinery, and electrical components & equipment, a decrease from 29% over the previous 90 day period. Telecommunications and media demonstrated the largest percentage increase in deal activity, increasing by 288% to 7.5% of overall activity.

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