The Perfect Private Equity Deal

The perfect deal, that’s what many private equity firms are searching for.  That’s, a buyout of a company with years of stable to growing free cash flow, moderately high and defensible profit margins and a management team right out of central casting.

The competition for those perfect deals is intense and results in private equity groups paying relatively high prices to win.  My colleague, Randy Schwimmer, author of the online newletter, “The Lead Left” reports the latest statistics in this excerpt from his recent issue:

Excerpt

For one thing, total leverage seems again to be reaching radioactive levels. Thomson Reuters LPC reports total debt to EBITDA for middle market institutional buyouts “skyrocketed” to 6.5x for the third quarter. Admittedly, that’s on a relatively small sampling, but the statistic points to a broader trend.

Higher leverage is being driven by similarly gravity-defying purchase price multiples. Of the four middle market LBOs where information is available, all were over 12x, and three were over 15x. This speaks to the fierce competition for new properties being engaged in by both private equity and strategic corporate buyers.

How long this lasts is anyone’s guess.   But, while it lasts, if your company fits the criteria, you might consider a sale.

To read “The Lead Left”, a subscription newsletter, click here.

Practical Guide to New Deal Marketing

I’ve just posted to my Growth Capital site (click here) practical steps to implementing the new marketing rules permitted under the JOBS Act.

Click or copy and paste this link: http://growth-cap.com/practical-guide-to-new-deal-marketing/

 

By Dennis McCarthy

Google

Financing Window for Middle Market Private Companies

GettingMoneyThe window is open for smaller middle market private companies to obtain capital from private equity funds.  The former cutoff of $5 million EBITDA to get interest from private equity firms seems no longer in place.  Smaller firms with less than $5 million of EBITDA are attracting interest.

If your smaller middle market company would benefit from additional equity capital, now may be the time.

Click here to go to my article on the new site, Growth Capital.
 By Dennis McCarthy
  Google