Love at First Sight: M&A Activity Continues Slowdown in 1Q2017

S&P’s Capital IQ market intelligence report reveals that the slowdown in M&A activity that started in 2016 continued into the first quarter of 2017 in terms of the number of closed deals (excluding oil & gas and real estate).

transactions by deal size transactions by deal size 2017The dollar value of closed M&A deals managed a slight 2% increase, however:

m and a annual trends

 

We hear private equity groups and other capital allocators bemoan the lack of quality deal flow while we work hard every day to close that gap.

One interesting observation from the inside is that virtually every PEG we interact with that has a presence in Healthcare Services and Financial Services informs us that they are aggressively seeking quality acquisition candidates yet these two sectors show the largest year over year declines:

us manda activity by sector

The schizophrenic market conditions continue.  PEGs want deals yet many have become incredibly fastidious in their analysis of quality deals, bouncing them for reasons that are often difficult to articulate or that ordinarily would not be cause for concern beyond the normal due diligence processes.

We still consider the Healthcare and Financial Services sectors to be in high demand based on our work with capital allocators.  The current love at first sightmarket requires much more marketing than the average deal typically requires.  It has never been easy to place a deal but in the present market, if it is not love at first sight, we are finding that it is requiring two to three times longer to find the right partner and we have to market the deal to four to five times the number of potential partners than we market the typical deal to.

 

 

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At Vertical Capital Advisors, we are most often engaged by industry leaders to be the bridge to the capital they need to fuel growth.  We start with great leaders at great companies that have compelling, profitable business plans where the only missing ingredient is capital.

ABOUT VERTICAL

Vertical Capital Advisors is an Atlanta-area business advisory firm built on creating tangible value for our clients, serving clients in just about every industry.  Our clients are both capital growers and capital allocators.  How can Vertical help your firm maximize value?

Joe Briner
Managing Director
Vertical Capital Advisors LLC
briner@verticalcapitaladvisors.com
866-912-9543 ext 108

 

 

 

 

Author: JoeBriner

Joe Briner is the Managing Director of Vertical Capital Advisors LLC. He is a financial executive with 25+ years experience starting, growing and leading profitable businesses, most recently focusing on helping businesses of all types recover, grow and thrive.