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Capital Restructuring | Fourth Quarter 2019

February 2020 – At the end of 2019, Moody’s and S&P reported default rates of 4.2% and 3.1%, respectively. According to S&P, the oil and gas sector and retail and restaurant sector led defaults in 2019. Moody’s expects the default rate to moderate to 3.5% by the end of 2020, assuming no severe deterioration in their macroeconomic assumptions, while S&P forecasts the default rate to rise to 3.9% by September 2020.

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Industrial Growth | Fourth Quarter 2019

February 2020 – During Q4 2019, equity capital market returns for SCA’s Industrial Sector Growth Index gained 6.6% while lagging both the S&P (+9.9%) and NASDAQ (+13.5%) indices over the same time period. The index experienced healthy results across all seven sectors throughout Q4, with notable performance in the index driven by Precision Machine Products (+15.7%) and Electronics & Components segments (+14.7%).

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Healthcare Services | Fourth Quarter 2019

January 2020 – Overall Healthcare Services M&A activity remained strong in 2019, with non-asset based services continuing to attract broad investor attention. According to preliminary figures from Irving Levin Associates Inc., 1,774 deals were announced in 2019, the second-highest on record with aggregate value of $401.7 billion beating the previous record in 2018 by 21%. Healthcare M&A remained robust across a number of sectors including acute care, post-acute care, physician practice management, behavioral health, managed care, and healthcare IT.

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Capital Restructuring | Third Quarter 2019

November 2019 – At the end of Third Quarter 2019, Moody’s and S&P reported default rates of 3.2% and 2.8%, respectively. While forecasts are that heightened levels of defaults are unlikely to occur in the next 12 months, defaults could challenge the last cycle peak if conditions deteriorate quickly, largely due to the record volume of single-B rated debt.

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Industrial Growth | Third Quarter 2019

November 2019 – During Q3 2019, equity capital market returns for SCA’s Industrial Sector Growth Index fell 4.2% and lagged both the S&P (+0.4%) and NASDAQ (-1.1%) indices over the same time period. The index experienced underwhelming results across six of its seven sectors throughout Q3, and positive performance in the index was driven solely by the Resource Recovery & Waste Management segment (+0.4%).

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Business Services | Third Quarter 2019

November 2019 – For the Third Quarter of 2019, the SCA Business Services Index increased by 1.0%, inline with the S&P 500 which rose 0.5%. Most sectors in Business Services including HR Services, Marketing Services, and Professional Staffing underperformed the broader market, as investors became increasingly concerned about the prospect of a slowing economy and its impact on slowing demand for staffing and HR related services. One sector that did outperform was Specialty Consulting which was up over 15.6% for the quarter as investors anticipated increased demand for restructuring services, as well as potential consolidation in the sector.

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Healthcare Services | Third Quarter 2019

November 2019 – The pace of healthcare M&A transaction activity in 2019 remained steady in Q3 with 396 announced transactions, although volume was down 15% from the previous quarter and 17% from the same period a year prior, according to preliminary figures from Irving Levin Associates Inc. Healthcare services transactions represented 66% of Q3 total deal volume, similar to the previous four quarters. Combined spending in Q3 2019 totaled $51.5 billion, down 63% compared with the previous quarter’s extraordinary $139.1 billion, but 65% greater than the $31.1 billion reported in the same quarter in 2018.

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Industrial Growth | Second Quarter 2019

August 2019 – During the Q2 2019, equity capital market returns for SCA’s Industrial Sector Growth Index fell 3.5%. The Q2 index performance lagged the S&P (+2.6%) and NASDAQ (+2.3%) indices over the same time period. The index saw mixed results throughout Q2, and growth in the index was driven by significant increases in the Analytical Instrumentation and Equipment Testing (+13.2%), Precision Machine Products (12.7%) and Resource Recovery and Waste Management (+9.3%) segments.

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Business Services | Second Quarter 2019

August 2019 – For the second quarter of 2019, the SCA Business Services Index increased by 2.9%, slightly ahead of the S&P 500, which rose 2.6%. Most sectors in Business Services including HR Services, Marketing Services, and Professional Staffing generally performed inline with the broader market, as investors overcame concerns about the prospect of a slowing economy and focused on Fed guidance of a rate cut and strong employment data. Of particular note was the performance of the Information Services sector which includes a broad range of proprietary data service providers such as CoStar, Equifax, Fair Isaac, and Gartner. The companies have continued to show strong earnings growth as their data becomes increasingly imbedded in AI decision tools for a broad range of businesses.

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Capital Restructuring | Second Quarter 2019

August 2019 – At the end of Second Quarter 2019, Moody’s and S&P reported default rates of 3.1% and 2.3%, respectively. According to Moody’s, defaults in Q2 2019 were led by companies in the oil and gas sector but they expect the highest default rates over the next 12 months to be in the media sector. S&P expects its default rate to increase to 3.1% by December 2019.

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Healthcare Services | Second Quarter 2019

July 2019 – With almost 425 healthcare transactions announced, M&A transaction volume in Q2 2019 was up 8% over Q1 2019. Compared to the record-breaking 2018 healthcare M&A transaction volume, Q2 2019 was down 12% versus the same time a year prior, according to preliminary figures from Irving Levin Associates Inc. Deal value in Q2 2019 totaled $138 billion, down 4% from the year-ago period. Consistent with Q1 2019, the long-term care sector accounted for the largest share of transaction activity, representing 27% of the total transaction volume with over 100 deals in both Q1 and Q2 of 2019, which is indicative of growing demographic trends across the country. In early June, Ventas, Inc. (NYSE: VTR) announced the first long-term care transaction in 2019 exceeding $1 billion, acquiring an 85% ownership interest in a seniors housing portfolio located throughout the Canadian province of Quebec for $1.8 billion.

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Capital Restructuring | First Quarter 2019

May 2019 – At the end of First Quarter 2019, Moody’s and S&P reported default rates of 2.4% and 2.1%, respectively. Moody’s reports that defaults were led by companies in the business services and retail sectors and forecasts the default rate will fall to 2.2% at year-end. S&P expects the default rate to reach 3.1% by December, up from 2.4% at year-end 2018, given more restrictive credit cycle conditions and multiple geopolitical pressures in the latter part of 2019.

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Industrial Growth | First Quarter 2019

May 2019 – During the Q1 2019, equity capital market returns for SCA’s Industrial Sector Universe grew 11.8%, with an average increase of 11.0% across the seven sectors. The Q1 index performance grew in-line with the S&P (+12.9%) and slightly lagged behind the NASDAQ (+15.9%) over the same time period. The index grew rather steadily throughout Q1, and growth in the index was driven by significant increases in the Analytical Instrumentation and Equipment Testing (+26.5%), Metal (18.3%), and Resource Recovery and Waste Management (+17.0%) segments.

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Healthcare Services | First Quarter 2019

April 2019 – With approximately 360 healthcare transactions announced, M&A transaction volume in Q1 2019 was down 19% as compared to the same time a year prior, according to preliminary figures from Irving Levin Associates Inc. Deal value in Q1 2019 totaled $149 billion, up 31% from the year-ago time period; however, three deals (one in the biotechnology, one in biopharma, and one in managed care) had a combined total of $113 billion, accounting for 75% of the quarter’s deal value. Without these three transactions, deal value in Q1 2019 would have totaled just $36 billion, 68% lower than Q1 2018. Representing 29% of the total transaction volume in Q1 2019, the long-term care sector accounted for the largest share of transaction activity, which is indicative of growing demographic trends across the country.

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