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Industrial Growth | Fourth Quarter 2017

March 2018 – During the fourth quarter, returns for the industrials sector in the equity capital markets continued their expansion momentum with the majority of the subsectors followed by SCA continuing their positive returns after two consecutive quarters of 3% GDP growth and consumer confidence at a 17-year peak. The Metals subsector led the industry with a quarterly return of +13.5%, compared with the S&P 500 quarterly return of +5.7%. Other industry subsectors with notable positive quarterly growth include Precision Machine Products +9.0%, Resource Recovery & Waste Management +5.4%, and Analytical Instrumentation & Testing Equipment +4.3%.

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Capital Restructuring | Fourth Quarter 2017

February 2018 – Moody’s and S&P reported year end default rates of 3.3% and 3.0%, respectively. Signs are that inflation is starting to dictate a rise in interest rates. The long-anticipated rise in interest rates will likely cause corporate borrowers that have avoided restructuring due to years of favorable monetary policies to begin to feel the stress of overleveraged balance sheets, and the increasing cost of borrowing may start to contribute to higher default rates potentially starting in late 2018 or early 2019.

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Business Services | Fourth Quarter 2017

February 2018 – For the fourth quarter of 2017, the SCA Business Services Index increased by 6.7% slightly above the increase of 5.7% for the S&P 500. IT Services and IT Consulting (up 8%), continued to outperform all other sub-sectors, driven by continuing demand for IT support services, both domestically and abroad, as well as accelerating M&A activity with the sector. As throughout 2017, investors continue to remain bullish on the outlook for all types of technology-enabled, outsourced services.
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Healthcare Services | Fourth Quarter 2017

February 2018 – Healthcare M&A transaction value in 2017 totaled approximately $315.2 billion, 23% higher than the previous year. The proposed merger of CVS Health Corp. (NYSE: CVS) and Aetna (NYSE: AET) accounts for $77 billion, or 24% of the year’s total. Excluding this merger, M&A spending in 2017 would have been 7% less than 2016, according to preliminary figures from Irving Levin Associates, Inc. Transaction volume for healthcare M&A in 2017 totaled 1,543 transactions, relatively flat as compared with 2016’s record-breaking volume of 1,593 transactions.
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Industrial Growth | Third Quarter 2017

December 2017 – During the third quarter, returns for the industrials sector in the equity capital markets continued their expansion momentum with the majority of the subsectors followed by SCA continuing their positive returns after two consecutive quarters of 3% GDP growth and consumer confidence at a 17-year peak. The Precision Machine Products subsector led the industry with a quarterly return of +10.5%, compared with the S&P 500 quarterly return of +3.7%.

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Capital Restructuring | Third Quarter 2017

November 2017 – Both Moody’s and S&P reported a drop in the default rate at the end of the Third Quarter 2017 to 3.3% and 3.1%, respectively. Both credit rating agencies forecast a further decline in the default rate, with Moody’s expecting the default rate to close the year at 3.1%, and S&P expecting the default rate to decrease to 2.8% by June 2018.

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Business Services | Third Quarter 2017

November 2017 – For the third quarter of 2017, the SCA Business Services Index increased by 5.0% compared with an increase of 3.7% 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, IT Services (up 8%), HR Services (up 12%) and Marketing Services (up 16%) all enjoyed very strong performance in the quarter. Overall, investors remain very bullish on the outlook for all types of technology-enabled, outsourced services.
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Healthcare Services | Third Quarter 2017

November 2017 – Transaction volume in healthcare M&A for Q3 2017 totaled 334 transactions, 14% lower than the same period in 2016 and 10% lower than the preceding quarter, according to preliminary figures from Irving Levin Associates Inc. Deal value in Q3 2017 totaled $42.8 billion, 12% lower than the same period in 2016. The services sector remained strong in Q3 2017, with 211 transactions accounting for 63% of the total volume. Managed care transactions were up 167% from the same time last year led by Centene Corporation’s (NYSE: CNC) $3.8 billion deal to acquire not-for-profit Fidelis Care as an initiative to enter the State of New York, the second largest managed care state by membership in the U.S. eHealth transactions increased 45% as revenue cycle management companies remain a strong investment opportunity for financial buyers. As of mid-September, 52% of revenue cycle management targets were acquired by private equity firms or other PE-backed eHealth platform companies. The behavioral health sector was also active in the quarter with a 44% increase in transactions over the same period last year as strategic and financial buyers seek to capitalize on significant industry fragmentation and growing demand that currently outstrips supply. Recent legislative changes have expanded the availability of behavioral healthcare services and have opened new channels for industry activity.
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Capital Restructuring | Second Quarter 2017

August 2017 – Moody’s and S&P both reported a 3.8% default rate at the end of the Second Quarter 2017. Moody’s expects that the media and retail sectors will see the highest default rates in the coming 12 months. Both credit rating agencies forecast a drop in the default rate in the foreseeable future, with Moody’s expecting the default rate to close the year at 3.1%, and S&P expecting the default rate to decrease to 3.3% by March 2018.

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Industrial Growth | Second Quarter 2017

August 2017 – During the second quarter, returns for the industrials sector in the equity capital markets continued their expansion momentum with the majority of the subsectors followed by SCA generating positive returns after a tumultuous six months of the Trump presidency. The Analytical Instrumentation & Testing Equipment subsector led the industry with a quarterly return of +12.4%, compared with the S&P 500 quarterly return of +2.7%. Other industry subsectors with notable positive quarterly growth include Plastics & Packaging +10.2% and Electronics & Components +5.0%.

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