The M&A industry is buzzing with activity. We take a dive into what types of acquisitions are most popular, the specific industries private equity groups like to invest in, and where M&A activity is headed in the coming months. As usual, click on the headline to read the full article.
M&A Trends – Add-Ons Take Center Stage
“One of the truly interesting phenomenons we have seen in recent years in the M&A industry is the move by buyers, especially private equity firms, ‘downstream’ into smaller-sized company valuations. A number of factors have contributed to this, the primary being this: Equity firms have learned that it is far safer and more lucrative to look for fragmented industries, acquire a mid-sized ‘platform‘ company and then ‘add on‘ to it by making a number of follow-up strategic acquisitions that are complimentary to the platform. In fact, last year more than 60% of all private equity acquisitions were add-ons.”
M&A Activity Predictions
A great indicator of future M&A activity is the level of deal launches and data rooms being populated. If a data room is opened and filled with information, it is a good indicator that a transaction will be closing eventually. Here’s what the Intralinks quarterly Deal Flow Predictor revealed about M&A activity.
PitchBook’s Findings on 2015 Merger & Acquisition Activity
“As the colorful chart illustrates, the reality is for private equity firms that focus on middle-market companies, there is a wide range of industries that they invest in even though the business press tends to focus on mega deals in “sexy” industries. Some of you may be surprised to learn this and may question the data.”
What Industries Do Private Equity Firms Invest In?
“So far this year is turning out to be even stronger than last in terms of buyer activity and interest. More and more sources are indicating that 2015 may end up being another record year for deal closings in the U.S. and worldwide.
Recently PitchBook, in conjunction with PricewaterhouseCoopers and Madison Capital Funding, released its 2Q 2015 U.S. PE Middle Market Report.”
Record Quarter for Mergers and Acquisitions Worldwide
“A number of factors are combining to possibly make this upswing the longest and strongest in the past 30 years or more: historically low interest rates, significant cash on corporate balance sheets, a strong stock market, significant capital that has been committed to private equity firms, and – most importantly – renewed confidence, especially in the U.S., that the economy is on strong footing and stable.”
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