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Business Services | Second Quarter 2017

July 2017 – For the second quarter of 2017, the SCA Business Services Index increased by 5.4% compared with an increase of 7.7% for the S&P 500. While the Business Services sector as a whole outperformed the broader market, several sub-sectors were notable for their performance. In particular, the IT Services and IT Consulting sectors were up over 6%, while Marketing Services and HR services both underperformed the S&P 500. Despite some concerns about weaker than expected economic growth in the second half of 2017, investors remain generally bullish on all types of technology enabled service offerings.
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Healthcare Services | Second Quarter 2017

July 2017 – Deal volume in healthcare M&A for Q2 2017 totaled 365 transactions, 14% lower than the same period in 2016 and 15% lower than the preceding quarter, according to preliminary figures from Irving Levin Associates Inc. Deal value in Q2 2017 totaled $99.8 billion, up 70% compared with Q1 2017, and 13% higher than the same period a year earlier. However, one deal accounted for approximately 25% of the quarter’s total involving medical device company Becton, Dickinson & Co.’s (NYSE: BDX) announced acquisition of C.R. Bard, Inc. (NYSE: BCR) in April for $24 billion.
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Capital Restructuring | First Quarter 2017

May 2017 – Default rates reported by both Moody’s and S&P approximated 4%-5% at the end of the First Quarter 2017. Moody’s expects that the retail sector will become the most troubled sector during the year. Both Moody’s and S&P forecast that the default rate will drop at the end of the year to 3.0% and 3.9%, respectively.

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Industrial Growth | First Quarter 2017

May 2017 – During the first quarter, returns for the industrials sector in the equity capital markets continued to rapidly expand with the majority of the subsectors followed by SCA generating positive returns after the much-anticipated Presidential election. The Analytical Instrumentation & Testing Equipment subsector led the industry with a quarterly return of +14.1%, compared with the S&P 500 quarterly return of +5.5%. Other industry subsectors with notable positive quarterly growth include Electronics & Components +7.7%, and Chemicals +7.4%. M&A activity for the quarter slightly increased compared to Q4 2016 with 258 transactions announced versus 220 deals last quarter; deal value lagged at $14.6 billion compared to $18.1 billion last quarter.

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Business Services | First Quarter 2017

May 2017 – For the first quarter of 2017, the SCA Business Services Index increased by 3.7% compared with an increase of 4.7% for the S&P 500. While the Business Services sector as a whole underperformed the broader market, several sub-sectors outperformed the overall market. In particular, IT Services was up over 8% and Staffing and HR Services was up 5.4%, while Marketing Services was in line with the S&P 500. Despite growing uncertainty around the legislative environment in Washington, each of these sectors is perceived to be well positioned to benefit from deregulation and accelerating business investment with temporary staffing reaching an all-time high penetration rate of 2.054% in March 2017.
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Healthcare Services | First Quarter 2017

May 2017 – Deal volume in healthcare M&A for the first quarter of 2017 totaled 395 transactions, 6% higher than the same period in 2016 and 7% higher than the preceding fourth quarter in 2016, according to preliminary figures from Irving Levin Associates Inc. This quarter’s deal volume sets a new record for all Q1 deal volume. Spending on deals was not as robust with $58.7 billion in Q1 2017, a 27% decrease from the same period a year prior, but 56% higher than the fourth quarter of 2016.
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Industrial Growth | Fourth Quarter 2016

March 2017 – During the fourth quarter, returns for the industrials sector in the equity capital markets improved substantially with all of the subsectors followed by SCA generating positive returns after the much-anticipated Presidential election. The Metals subsector led the industry with a quarterly return of +28.8%, compared with the S&P 500 quarterly return of +3.6%. Other industry subsectors with notable positive quarterly growth include Resource Recovery & Waste Management +12.1%, Precision Machine Products +11.1%, and Analytical Instrumentation & Testing Equipment +6.4%. M&A activity for the quarter slightly increased compared to Q3 2016 with 220 transactions announced versus 216 deals last quarter; deal value was also significantly less at $18.1 billion compared to $20.8 billion last quarter.

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Business Services | Fourth Quarter 2016

March 2017 – For the fourth quarter of 2016, the SCA Business Services Index increase by 2.99% consistent with an increase of 3.59% for the S&P 500. The Business Services sector, like the overall market, was driven by investors’ post-election expectations for accelerating growth under the new administration. In particular, staffing and HR Services, Specialty Consulting and Marketing Services were all trading at near 52-week highs at the end of 2016, as the sectors were poised to benefit from increased hiring and investing from small and mid-sized businesses.
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Capital Restructuring | Fourth Quarter 2016

February 2017 – Default rates reported by both Moody’s and S&P reached 5.0%+ during Q3 2016 at 5.4% and 5.0%, respectively. According to Moody’s, default risk will remain higher in the energy sector than in other industries over the next year. Further, Moody’s expects the speculative-grade default rate to climb from 5.4% currently to end the year at 5.9% before declining to 4.1% by Third Quarter 2017.

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Healthcare Services | Fourth Quarter 2016

January 2017 – Deal volume in healthcare M&A in 2016 totaled 1,536 transactions, 1% higher than 2015, the first year to break 1,500 transactions, according to preliminary figures from Irving Levin Associates. Inc. Spending on deals in 2016 was robust. Deal value in 2016 totaled $255.7 billion, representing a 36% decrease from 2015’s total of $400.3 billion (including $91.2 billion in managed care deals that may dissolve by the end of January, depending on the outcome of federal court challenges).
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Industrial Growth | Third Quarter 2016

November 2016 – During the third quarter, returns for the industrials sector in the equity capital markets drastically improved, with all but one of the subsectors followed by SCA generating positive returns. M&A activity for the quarter decreased compared to Q2 2016 with 216 transactions announced versus 249 deals last quarter; deal value was also significantly less at $20.8 billion compared to $99.8 billion last quarter predominantly due to the announced $65 billion merger between Bayer AG and Monsanto Company in the Chemicals (fertilizers and agricultural) sector in Q2 2016.

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