In M&A, Is Flat the New Up?

By Dennis McCarthy – (213) 222-8260 – dennis@mbsecurities.com – 

In my experience with M&A deals, everything increases; it goes up.

All projections show increases in revenues and profits.  If you buy a company today, you’ll sell it for more money later.  Deals get bigger. Debt leverage goes up.  M&A multiples go up.  The M&A business, itself, goes up.  But what if…?

That’s the sobering message from  a study of middle market M&A published by Deloitte, the international accounting firm, looking back over 2011 and 2012.

Deloitte reports that between 2011 and 2012, middle market M&A was flat.  Deal volume was flat. Average deal value was flat.  Purchase price multiples were flat. Senior debt multiples were flat.  You get the idea.

But look on the bright side.  At least those metrics were flat.

International acquisitions of US middle market companies declined.

Purchase price multiples of LBOs declined.

All things considered, flat may not be so bad.  Maybe flat is the new up.

Supposedly, statistics don’t lie.  But 2012 certainly seemed to me to be a better, more active year than 2011.

Company executives I know seemed to be more confident that the economy was stable.  Not big growth but no big problems either.

Maybe we won’t see the impact of the improved environments until this year, 2013, given how long it takes to close an M&A deal,

I know I’m looking forward to an active 2013.  In any event, I’ll take flat over down every time.

I’ve attached a link to the Deloitte report below.

Please contact me to help your company with M&A or any capital market project. 

Deloitte US Middle Market M&A Stats 2012

 

Google