Exit and Growth Strategies for Middle Market Businesses

Archive for 2014

Q3 Technology, Media & Telecom M&A Industry Report

By Kim Levin | 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


Q3 Plastics & Rubber M&A Industry Report

By Kim Levin | Oct 17, 2014

granulesM&A activity for North American based target companies in the plastics and rubber sector for Q2 2014 included 20 closed deals and total deal value of approximately $2.65 billion, according to data provided by S&P Capital IQ. This is a 20 percent decrease in the number of deals since Q1 2014, but a large increase in deal value compared to the $340 million deal volume in the previous quarter.

Read the Entire Plastics & Rubber 3rd Quarter Newsletter Here

Q3 Metal Fabrication M&A Industry Report

By Kim Levin | Oct 10, 2014

MFIPG-Metal PartM&A activity in the metal fabrication sector for North American based target companies in Q2 2014 included 16 closed deals, according to data provided by S&P Capital IQ. The deal environment in the metal sector has rebounded over a slow first quarter, according to a report from international consulting firm PricewaterhouseCoopers. As smaller machine shops struggle to stay viable, operators with strong cash reserves are likely to take advantage by buying up assets and using scale to focus productivity on higher-margin capacity.

Read the Entire Metal Fabrication M&A 3rd Quarter Newsletter Here

Q3 Aviation, Aerospace & Defense M&A Industry Report

By Kim Levin | Oct 03, 2014

Nose WheelM&A activity in the North American Aerospace and Defense sector for Q2 2014 included 29 closed deals according to data provided by S&P Capital IQ. Total deal value soared to $443 million, while average deal value reached $44 million. High deal value is largely attributed to several mega deals, the largest being The SI Organization’s $215 million acquisition of QinetiQ North America. Three additional deals, valued at more than $60 million added to the high deal value of the quarter.

Aerospace M&A remains robust with volume expected to match the record high set in 2013. However, deal making on the defense side has not been as strong.

Read the Entire Aviation, Aerospace & Defense M&A 3rd Quarter Newsletter Here

Good News for Middle Market Business Sellers

By Kim Levin | Oct 01, 2014

Middle Market PulseGF Data is out with their Mergers & Acquisitions Report for the second quarter of 2014 and in some ways, it’s status quo and in other ways, not so much. With a scarcity of quality companies for sale and an abundance of both lending capital and investable funds, the tale of the tape is a little bit different this period.  Valuations remain consistent with those of Q1, but debt levels have never been greater and a there is a new “look” to the companies that investors are stocking in their portfolios.

As we have mentioned in previous months, a high percentage of companies that have been acquired since 2003 have been “best in class” businesses. These are characterized by above average EBITDA margins and revenue growth.  Over the life span of GF Data’s deal sample, 57% of all total deal activity has involved above average quality companies.  However, year to date those figures are at 40%, either signaling an anomaly in the chart or a changing of the guard.

If this is indeed a changing of the guard, this is a good sign for middle market business owners who either have been on the market or are considering a sale. Financial investors constantly face the dilemma of needing to put their money to work while mitigating as much risk as possible.  Best in class companies foot this bill.  But with a scarcity of those companies in the market, they must be finding a way to consider less than perfect candidates.  Data has shown that smaller “add-on” deals have become more popular during the post-recession recovery.  It is possible that additional relaxed standards have also been adopted leading to a wider pool of potential target companies.  If this is the case, this signals a positive trend for middle-market sellers.

Subscribe to the Middle Market Pulse

Q3 Engineering and Construction Industry M&A Report

By Kim Levin | Sep 26, 2014

EngineeringM&A activity in the Engineering and Construction sector for the United States based target companies in Q2 2014 included 54 closed deals according to data provided by S&P Capital IQ.  The ENR Construction Industry Confidence Index survey has shown that despite lower-than-expected growth in in the construction industry most executives believe the recovery will continue, and possibly accelerate, throughout the rest of the year. A minor surge in demand has been tempered by the soft pricing for materials, limiting fears from a year ago when prices spiked with the housing recovery.

Read the Entire Engineering and Construction M&A 3rd Quarter Newsletter Here

M&A Activity on the Rise

By Kim Levin | Sep 25, 2014

Upward chartThis year has been very active in all aspects of the financial universe and M&A has benefitted from climbing valuations coupled with surprisingly cheap borrowing costs. One year further out from the great recession and things are slowly looking up. The S&P has reached new heights and investors can’t find a reason to quit buying. Deal activity is firing from the lower middle market all the way up to the mega deals which have dominated headlines. So far 2014 has provided solid returns in almost every asset class and private equity firms have taken advantage of buyers’ appetites, pushing to exit investments they’ve held onto since before the height of the financial crisis.

M&A activity has been on the rise for the first half of 2014, with the $1,571bn total aggregate transaction value representing an increase of 56% from the same period in 2013. There were 76 deals with transaction values between US $2-10bn, the greatest number of large bracket deals since the second quarter of 2007, according to a trend report by Merger Market. Also, Merger Market mentions the number of mega-deals during the Q2 of 2014 increased to ten deals worth approximately $311bn, the most since Q4 of 2008. Compared to the same time last year, total aggregate deal value has increased 98% in the United States and 56% worldwide. Highlighting global M&A activity, Cross-border deals increased 107% against the 1st half of 2013.

Read the Entire Middle Market Business Insights 2nd Half 2014

Q3 Industrials Industry Update

By Kim Levin | Sep 19, 2014

latheM&A activity for North American based industrial target companies in Q2 2014 included 517 closed deals and total deal value of $10.3 billion, according to data provided by S&P Capital IQ. According to a report from, President & CEO Magazine, a business trade magazine, M&A activity surged in the second quarter with the industrial sector on track to post the strongest year of M&A since before the 2008 financial crisis.  

According to a report from PricewaterhouseCoopers, an international consulting firm, the industrial sector saw a 72% increase in transaction announcements over Q1. Several mega-deals were announced, and although some were withdrawn, it indicates that the market has grown and is actively looking to consolidate. According to the report industrial manufacturers will continue to search for growth in non-core businesses with strong leadership and an existing competitive advantage.

Read the Entire Industrials M&A 3rd Quarter Newsletter Here

Banking Relationships Do Matter

By David Sinyard | Sep 16, 2014

BankI have recently been elected to the board of directors of a community bank in Atlanta.  My prior experiences with banks have been obtaining loans and having business and personal accounts to pay bills and cash checks.  I sit on a number of committees, including a loan committee.  Over the past few months my experience has confirmed that the relationship that a business owner has with his/her banker is critical.

I had a client several years ago whose business was very negatively affected by the downturn.  His bank, a national bank, took the opportunity to force him to pay penalty interest for what they viewed were covenant breaches.  We obtained an SBA loan, refinanced the bank’s loans, and negotiated to get much of the penalty interest refunded to the client. Another client was recently informed by representatives of his national bank that his banking relationship was not big enough for them, so he needed to find another bank!  Apparently $10 million in loans and active bank balances was not enough for them.

Last night I was talking with the president of my bank and an owner of a local $60 million business.    This owner had no relationship with anyone from his national bank except that he had played golf once with someone senior.  He was very interested in talking to us as he was looking for a real banking relationship and some true service.

As a business owner, how good is your relationship with your bank?  While the big banks do all the advertising and seem to want your business, the community and regional banks may be a better choice.  When we review a loan application, much of the conversation is about the longer term client relationship.  Do you feel that your banker feels that way?

Posted by David Sinyard.

Subscribe to the Middle Market Pulse


Q3 Energy Industry Newsletter

By Kim Levin | Sep 12, 2014

ENIPG-Deep Sea Oil RigM&A activity in the Energy sector for North American based target companies in Q2 2014 included 143 closed deals according to data provided by S&P Capital IQ.  According to a report from Mergermarket, an industry research group, the average deal value was up more than 60% compared to Q1 driven primarily by energy producing targets. Other strong sectors for energy M&A included oil and gas field services companies and exploration companies. Strategic buyers were particularly active in the space looking to gain market share and new technology by purchasing high growth companies.

Read the Entire Energy M&A 3rd Quarter Newsletter Here