Bay Capital Partners Signs 5th and 6th Clients of 2007
posted by John Barneson at
2:20 PM
Thursday, February 21, 2008
Friday, January 4, 2008
2008 M&A Outlook
Some key points and thoughts garnered from the recent Deal Journal report: Strong prediction that multiples will stabilize after several years of increases, with strategic buyers making perhaps a more aggressive play for bolt-ons while private equity players continue to look for opportunities to bring what is a still a significant amount of capital to bear on the market.
Mid-Market Investment
The cutoff for deals that look to continue to be active during a tighter lending market seems to be $500 million and lower. Nevertheless, it's at this price point and below where the real action for 2008 will be, thanks to a tightening down of leverage levels and remaining economic hurdles in the big-market landscape. After many years of steep increases in valuations-where generous terms drove leverage multiples as 8-12x EBITDA look to anticipate stable pricing for the foreseeable future, with companies valued under $500 million financed at multiples in the range of four to six times EBITDA.
Private Equity – Not Going Anywhere
Private Equity will remain a player, having collectively raised $300 billion in 2007, which is $46 billion more than in 2006. Terms and leverage might not be as easy as 2007
Multiples
Multiples will probably hover in the same range-four to seven times adjusted cash flow-even though demand is expected to tick upward. Buyers remain cautious, even skittish, and the smaller the deal, the more challenging it will be to close the transaction.
Sweet Spot Scarcity
Meanwhile, sellers with revenues between $10 million and $20 million with good earnings remain in a very strong position. However, acquisition opportunities in this sweet spot are scarce. Hence, the renewed focus on strategic acquisitions under $10 million. Now more than ever it is critical to have the right advisor on your side if attempting to raise capital or be acquired. The intricacies of the financial and strategic dealscape are becoming more and more complex, and more and more often we are seeing unrepresented sellers leaving money on the table.
Mid-Market Investment
The cutoff for deals that look to continue to be active during a tighter lending market seems to be $500 million and lower. Nevertheless, it's at this price point and below where the real action for 2008 will be, thanks to a tightening down of leverage levels and remaining economic hurdles in the big-market landscape. After many years of steep increases in valuations-where generous terms drove leverage multiples as 8-12x EBITDA look to anticipate stable pricing for the foreseeable future, with companies valued under $500 million financed at multiples in the range of four to six times EBITDA.
Private Equity – Not Going Anywhere
Private Equity will remain a player, having collectively raised $300 billion in 2007, which is $46 billion more than in 2006. Terms and leverage might not be as easy as 2007
Multiples
Multiples will probably hover in the same range-four to seven times adjusted cash flow-even though demand is expected to tick upward. Buyers remain cautious, even skittish, and the smaller the deal, the more challenging it will be to close the transaction.
Sweet Spot Scarcity
Meanwhile, sellers with revenues between $10 million and $20 million with good earnings remain in a very strong position. However, acquisition opportunities in this sweet spot are scarce. Hence, the renewed focus on strategic acquisitions under $10 million. Now more than ever it is critical to have the right advisor on your side if attempting to raise capital or be acquired. The intricacies of the financial and strategic dealscape are becoming more and more complex, and more and more often we are seeing unrepresented sellers leaving money on the table.
Labels: clients
posted by John Barneson at
4:36 AM