InSight

Exit and Growth Strategies for Middle Market Businesses

M&A Quarterly News In The Energy Industry Sector

By Roy Graham | Aug 06, 2019

The report below gives a good overview of the third quarter M&A activity in the Energy Industry Sector. M&A activity for North American based target companies in the Energy sector for Q2 2019 included 58 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions in the sector closed in June when Austin Energy acquired the Nacogdoches Generating Facility from Southern Power Co., which is ultimately owned by The Southern Co. for US$460 million. The transaction enhances Austin Energy’s portfolio of services and products. Nacogdoches Generating Facility is located in Texas.

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M&A Quarterly News In The Wholesale Distribution Industry Sector

By Jeremiah Hughes | Aug 05, 2019

The report below gives a good overview of the third quarter M&A activity in the Wholesale Distribution Industry Sector. M&A activity for North American based target companies in the Wholesale Distribution sector for Q2 2019 included 149 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions was announced in May when Tailwind Management LP acquired Ring & Pinion Service, Inc., also doing business as RANDY’S Worldwide Automotive, Inc. and a portfolio company of PNC Erieview Capital, Linsalata Capital Partners, Inc. and the private equity arm of Barings LLC. The deal was reportedly valued at US$187 million. The deal reinforces RANDY’s growth and expansion strategy. Ring & Pinion Service is located in Everett, Washington and distributes automotive parts.

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M&A Quarterly News In The Hospitality and Leisure Industry Sector

By David Hulett | Jul 31, 2019

The report below gives a good overview of the third quarter M&A activity in the Hospitality and Leisure Industry Sector. M&A activity for North American based target companies in the Hospitality and Leisure sector for Q2 2019 included 66 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions was announced in June when Cedar Fair LP acquired the Schlitterbahn Waterpark & Resort New Braunfels and the Schlitterbahn Waterpark Galveston from Waterpark Management Inc, doing business as Schlitterbahn Waterpark & Resort, for US$261 million in cash, subject to certain working capital adjustments. The transaction increases Cedar Fair’s portfolio expands its footprint in the Texas region and accelerates its growth and profitability. The acquired waterparks generated annual revenues of approximately US$68 million in 2018.

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M&A Quarterly News In The Financial Services Industry Sector

By David Sinyard | Jul 29, 2019

The report below gives a good overview of the third quarter M&A activity in the Financial Services Industry Sector. M&A activity for North American based target companies in the Financial Services sector for Q2 2019 included 220 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions was announced in June when Intertrust NV acquired Viteos Fund Services, LLC, a portfolio company of FiveW Capital, LLC and PPC enterprises, LLC, for US$330 million in cash. Intertrust engages in the provision of private client, capital markets, corporate and fund services. Viteos Fund Services provides accounting, middle- and back-office outsourcing and licenses its platform to investment managers. The company was founded in 2003 and is headquartered in Somerset, NJ.

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M&A Quarterly News In The Commercial Real Estate Industry Sector

By Peter Moore | Jul 29, 2019

The report below gives a good overview of the third quarter M&A activity in the Commercial Real Estate Industry Sector. According to data released by CBRE, a leading commercial real estate firm, commercial real estate investment volume decreased by 12.7% year-over-year in Q1 to $99.6 billion. However, trailing four-quarter volume increased by 11.6% year-over-year, the second-highest rate since 2015.

Capitalization rates for the quarter declined slightly by 15 bps.

Commercial real estate acquisition volume lagged in Q1 driven by a rise in interest rates and pricing expectations.

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The Death Discount

By Patrick Powell | Jul 25, 2019

I recently had a conversation with a middle-market business owner who asked me about the value of an enterprise when the generation 1 owner (founder) passes away.  I walked him through a buyer’s perspective of how the business typically suffers a loss of value due to the loss of intellectual capital.  According to Wikipedia, “Intellectual capital is the intangible value of a business, covering its people (human capital), the value relating to its relationships (relational capital), and everything that is left when the employees go home (structural capital), of which intellectual property (IP) is but one component.”

I told him that I call it the “Death Discount”.  My apologies for the lack of tact, but this is a business blog.  How is it valued?  That depends on the buyer’s analysis, but don’t be shocked if it is up to 30 percent.

So, how does a business owner convey his or her intellectual capital to the business in way not to suffer loss at the end of the owner’s life?  Depending on the type of business, this can be exceedingly difficult.  The answer begins with a developing a thoughtful intellectual capital transfer plan.  Working with a business consultant can be helpful, because you want an outside view and analysis of the very important things that are not obvious, i.e. not on your balance sheet.

These things include the answers to questions which begin with “Who do I call when ________ happens?”.  In many businesses there are simply formulas which may be unrecorded to trigger a business founders’ decision to buy or sell property or other assets such as inventory.  Making these decisions timely may have contributed to the business’s profitability and in turn value.

The list of these intellectual capital items should be identified in your plan and documented to the best of the owner’s ability in order to transfer the value to the next generation of owners.


M&A Quarterly News In The Agriculture Industry Sector

By Dan Halvorson | Jun 26, 2019

The report below gives a good overview of the second quarter M&A activity in the Agriculture Industry Sector. M&A activity for North American based target companies in the Agriculture sector for Q1 2019 included 25 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions was announced in February when Nutrien Ltd acquired Van Horn, Inc. for an undisclosed amount. The acquisition enhances Nutrien’s retail business. Following the transaction, Van Horn joins Nutrien AG Solutions, a subsidiary of Nutrien Ltd. Van Horn is located in Illinois and produces and retails hybrid agricultural products.

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M&A Quarterly News In The Engineering and Construction Industry Sector

By Peter Heydenrych | Jun 26, 2019

The report below gives a good overview of the second quarter M&A activity in the Engineering and Construction Industry Sector. M&A activity for North American based target companies in the Engineering and Construction sector for Q1 2019 included 83 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions was announced in February when Authority Brands, LLC, a portfolio company of Apax Partners (UK) Ltd, acquired Clockwork IP, LLC, a subsidiary of Direct Energy Services, LLC, ultimately owned by Centrica Plc, for US$300 million. Founded in 1999, Clockwork IP is located in Houston, Texas and provides residential heating and cooling, electrical and plumbing services.

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M&A Quarterly News In The Food and Beverage Industry Sector

By Terry Fick | Jun 21, 2019

The report below gives a good overview of the second quarter M&A activity in the Food and Beverage Industry Sector. M&A activity for North American based target companies in the Food and Beverage sector for Q1 2019 included 48 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions was announced in February when PepsiCo, Inc. acquired CytoSport, Inc. from Hormel Foods Corp for US$465 million in cash. Included in the acquisition are the Muscle Milk and Evolve Brands. CytoSport is located in California and manufactures nutritional supplement products.

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M&A Quarterly News In The Consumer Retail Industry Sector

By Joe Sands | Jun 21, 2019

The report below gives a good overview of the second quarter M&A activity in the Consumer Retail Industry Sector. M&A activity for North American based target companies in the Consumer and Retail sector for Q1 2019 included 151 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions was announced in March when a private group led by OpCapita LLP and the management of Maurices, Inc., acquired an undisclosed majority stake in Maurices from Ascena Retail Group Inc for US$300 million in cash. The transaction would allow Maurices Inc to enhance its growth opportunities. Founded in 1931, Maurices is located in Duluth, Minnesota and operates retail clothing stores.

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