InSight

Exit and Growth Strategies for Middle Market Businesses

News From the Metal Fabrication Industry

By Robert Contaldo | Dec 19, 2014

TurbineDespite increased demands for steel from end-use industries such as automotive, construction, and energy sectors, steel production has declined globally. Simultaneously, steel prices have remained weak; further declines in prices are expected as demand growth flattens. A positive note from this is the decrease in iron ore prices, which could lower production costs for steel makers. Also, demand for aluminum has increased, showing that the surplus in capacity may end soon. This is partly driven by the increased use of lightweight alloys in automobiles and aircrafts.

Strong growth in the United States GDP (4.6 percent in the second quarter) combined with improvements in key end-use sectors such as automotive and construction, should drive increased demand, leading to a need for increased capacity.

 

Read the Entire Metal Fabrication 4th Quarter Newsletter Here


M&A News for the Aviation Industry

By Joe Contaldo | Dec 12, 2014

Private JetAccording to First Research, global shipments of general aviation aircraft, a demand indicator for aircraft parts, increased 4.8% in the first half of 2014 compared to the same period in 2013, according to the General Aviation Manufacturers Association (GAMA). Business jets saw the largest jump in demand as shipments increased by 12.4%. Makers of aircraft parts serving the general aviation market may want to focus marketing and production resources on business jets and piston aircraft, which are experience strong demand.

In addition, Aerospace companies are increasingly following the lead of many automakers and choosing to situate new US facilities in the southern part of the country, according to Stateline, the news service of the Pew Charitable Trusts. Companies that have recently established facilities in the South or announced plans to do so include Airbus (Alabama), Boeing (South Carolina), GE Aviation (North Carolina), and Gulfstream (Georgia).

Read the Entire Aviation, Aerospace & Defense M&A 4th Quarter Newsletter Here


M&A Trends in the Food & Beverage Industry

By Terry Fick | Dec 05, 2014

Cut VeggiesThe food and beverage industry is directly connected to the consumer and has been adapting to consumers who are more actively using social media and mobile technology in their buying decisions. Based on survey of executives in this sector by KPMG, an audit, tax and advisory firm, growth is of high priority. The main channels of growth, based on executive respondents, are product innovations, attracting new customers, capturing alternative sales channels, focusing on healthier and specialty products, and M&A activity. 

Read the Entire Food & Beverage 4th Quarter Newsletter Here

 

 

 


Q4 Industrials M&A Update

By Kim Levin | Dec 01, 2014

737632-industry-on-a-misty-night for blogM&A activity for North American based industrial target companies in Q3 2014 included 563 closed deals and total deal value of $20.3 billion, according to data provided by S&P Capital IQ. This is a slight increase from the previous quarter where 541 deals were closed. Total transaction value increased from $11.4 billion to $20.2 billion from Q2 2014 to Q3 2014 largely due to the AECOM acquisition of URS Corporation.

Oil, gas, and petrochemical related companies dominated industrial manufacturing activity. Almost 40 percent of US related transactions were energy related deals. In addition, there were several mega-deals announced, indicating the market has grown and is actively looking to consolidate. According to the report, industrial manufacturers will continue searching for growth in non-core businesses with good leadership and an existing competitive edge.

Read the Entire Industrials M&A 4th Quarter Newsletter Here


Q4 Engineering & Construction Industry M&A Report

By Catherine Patience | Nov 21, 2014

M&A activity in the Engineering and Construction sector for North American based target companies in Q3 2014 included 67 closed deals according to data provided by S&P Capital IQ.  This is a slight decrease in deal count since Q2 2014, where 72 transactions occurred. Total transaction value increased dramatically between Q2 and Q3 from $565 million to $6.57 billion due to the AECOM purchase of URS Corporation.

Read the Entire Engineering and Construction M&A 4th Quarter Newsletter Here

 


Q4 Energy M&A Update

By Kim Levin | Nov 14, 2014

Oil PumpM&A activity for North American based target companies in the energy sector for Q3 2014 included 117 closed deals and total deal value of approximately over $8.13 billion, according to data provided by S&P Capital IQ. 

Q3 2014 was a quieter period for global oil and gas M&A activity compared to the previous quarter, but this year is still on track to have a greater total M&A spend than 2013. North American activity grew for the fifth consecutive quarter fueled by unconventional oil resource plays in the Permian Basin. M&A activity in the Permian Basin has been on the rise since Q1 2014. For 2014, acquisitions in the Permian Basin made up nearly half of the total E&P deal value in the U.S. and just under a third of total E&P deal value worldwide at around $11.2 billion. North American gas exports, gas assets are also becoming more and more marketable.

Read the Entire Energy M&A 4th Quarter Newsletter Here

 


Q4 Healthcare M&A Update

By Catherine Patience | Nov 07, 2014

HEIPG-PipetteM&A activity for North American based target companies in the healthcare sector for Q3 2014 included 299 closed deals and total deal value of approximately over $14 billion, according to data provided by S&P Capital IQ. M&A Activity in the quarter was down by 11% versus Q2 2014 from 333 to 299 deals closed. The average total deal value also fell by nearly 200% from $379 million to $165 million. 

New data from Frost & Sullivan’s, an industry research group, “Analysis of Mergers and Acquisitions Trends in the United States Healthcare Provider Industry” reveals that M&A deals in the post-acute care, surgical and emergency center segments are expected to drive M&A activity in the U.S. healthcare provider industry. According to the report, the upward trend is also being driven by other factors having a negative impact on healthcare providers’ bottom line. This includes the charges levied on hospitals that get admissions due to hospital-acquired conditions, the Hospital Readmissions Reduction Program that imposes penalties on hospitals with high readmission rates, and value-based purchasing that ties hospitals’ performance to reimbursement rates for Medicare patients.

Read the Entire Healthcare 4th Quarter Newsletter Here

 


Q3 Transport, Logistics and Supply Chain M&A Update

By Kim Levin | Oct 31, 2014

TLIPG-Rail TunnelM&A activity in the Supply Chain and Logistics sector for North American based target companies in Q2 2014 included 44 closed deals according to data provided by S&P Capital IQ. The average deal value was $74 million with an average enterprise value to revenue multiple of .79.

Overall valuations are modest for several reasons. First, transportation deals are cyclical and have already passed the high peak after the low from the recession. Another contributing factor is the horizontal consolidation of smaller trucking companies as opposed to transactions involving more costly modes like airlines and rail.

Read the Entire Transport, Logistics and Supply Chain 3rd Quarter Newsletter Here


The Art of Corporate Inversions

By David DuWaldt | Oct 27, 2014

Tax PendulumHave you ever heard of a “Double Irish?” To some readers, this term may sound more like a stiff drink. Perhaps the tax lawyers and accountants that serve multinational corporations are becoming more like bartenders by preparing the kind of “drinks” their customers really desire.

The Double Irish is a tax avoidance arrangement involving two Irish registered companies. The structure is quite effective for companies with valuable intellectual property rights and it has been commonly used by large technology and pharmaceutical companies. The structure involves the payment of royalties and fees between controlled entities for the use of intellectual property rights. One of the Irish companies is offshore and located in a tax haven such as Bermuda or the Cayman Islands and holds non-U.S. intellectual property rights. The other company is based in Ireland. The entity based in Ireland pays royalties and fees to the entity in the tax haven thereby reducing taxable income. The left over profits for the entity based in Ireland are taxed at the rate of 12.5%. Now compare the foregoing structure to a plain vanilla C corporation based in the United States, with taxable income above $18,333,333, thereby paying income tax at the rate of 35%, plus any applicable state and local taxes. Read more »


Q3 Technology, Media & Telecom M&A Industry Report

By Catherine Patience | Oct 24, 2014

ITIPG-BinaryM&A activity for North American based target companies in the Technology, Media and Telecom sector for Q2 2014 included 750 closed deals, according to data provided by S&P Capital IQ. Industry insiders believe M&A activity in the sector for the remainder of 2014 will continue to increase, according to a survey released June 5 by international law firm Morrison & Foerster LLP and tech research firm 451 Research LLC. The report polled 157 C-level and business development executives, general counsel, as well as VC and private equity figures in the Technology, Media and Telecom. Approximately 72 percent of respondents, polled in mid-April, said they planned shift focus toward M&A activity through the end of the year, up from 50 percent last November.  Cash on the balance sheet for strategics and good financing conditions for LBO transactions in addition to a desire for growth through acquiring new technologies were cited as factors that should  M&A. Only 4 percent of those polled expect activity to decrease, the report said.

Read the Entire Technology, Media and Telecom 3rd Quarter Newsletter Here