The M&A environment in the U.S. is as heated as ever; and, while those of us in Middle Market Investment Banking more often than not represent sellers, we relish working with buy-side clients with well-defined missions and criteria.
We understand that the Holy Grail for any buyer is the one-on-one “negotiated” deal with a seller, where there is no sell-side advisor, no competition from other buyers, no hard-and-fast timetables, and the due diligence routine is very accommodating to the buyer. However, though these “proprietary” deals do exist, they are uncommon, especially for those sellers at or exceeding $5 million in EBITDA. Instead, the buyer should expect that any well-run, solidly profitable Middle Market company will be represented by an Investment Banker and sold through what we call in the industry, “the Process”.
The M&A market in the U.S. has been and continues to be fueled by very low “real” interest rates, exceptional amounts of cash in PE firms, hedge funds, and large corporations, and moderate-at-best macroeconomic (i.e. organic) growth prospects. Demand for good deals exceeds the available supply of good targets, and the sell-side auction-like process is an entrenched feature of our M&A market. Prospective buyers, particularly bargain hunters from offshore, can find the experience to be a challenge, wishing they had more control, less pressure to modify their offers, and general freedom from the constraints of “the Process”. Read more »