In this week’s M&A Weekly Digest, global M&A activity is holding steady and shows a high level of foreign interest in U.S. companies; an acquisition by a private equity firm teaches private business owners to avoid assuming who their optimal buyer might be; a look at the breakdown of aerospace and defense investments by deal size shows that over 50 percent of the deals involved middle-market companies; and Blue Sage Capital’s portfolio is proof that some PE firms have a geographical focus, rather than finding investments by industry.
“A couple of times a year, Robert W. Baird Company publishes an M&A update. Their latest study is in agreement with what other analysts are saying about the current M&A market: Despite growing concerns about economic growth, wild stock market fluctuations, and S&P credit downgrades, M&A activity continues to be strong globally.”
“What was also compelling in the Baird study was the significant interest in U.S. companies by offshore buyers. Based on the Baird data, there have been moreof U.S. companies by offshore buyers in the first seven months of 2011 than in all of last year combined (inbound transactions).”
Friedman Fleischer & Lowe, a San Francisco-based private equity firm focused on U.S. middle-market companies, acquired CHI Overhead Doors, a manufacturer of overhead sectional garage door products in the residential and commercial markets and of steel doors in the commercial and industrial segments.
The lesson learned from this acquisition: “Equity firms like FFL are always looking for good deals DESPITE the industry that the target may be in.”
Many business owners think no one will be interested in buying their business because of their small sizes. PitchBook published data about the breakdown of aerospace and defense investments since 2008 that disproved this common thought.
“Of the 99 deals analyzed by PitchBook, an astounding 56% of them were valued BELOW $49 million. If you are surprised, you are not the only one—I was shocked. Again, the huge deals closed in the aerospace and defense industries are the ones we hear about. However, according to the data, the vast majority are smaller middle-market companies.”
Carl Doerksen takes a look at Blue Sage Capital, a private equity firm that focuses on small middle-market companies located in Texas and the Southwest. He points out that the buyer universe is quite large for business owners looking to sell.
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