Posted on April 3, 2017
Fear stalks the land. The Robot Apocalypse is nigh, destined to steal our jobs and our future. Worse yet the machines are made elsewhere (Germany, Japan, even China) and America is being left behind in the race for manufacturing prowess.
We’ve heard this story before. In the late 1980s, the U. S. computer memory industry had been decimated by Japanese and Korean competition. To the Cassandras, this meant that the U.S. had forever lost the global economic race and was destined to become a second-rate power.
Nothing could have been further from the truth. The prerequisites for U.S. global dominance of the technology world were already in place. Within a few years, U.S. prowess in personal computers, microprocessors, and digital networking would lead to a capital investment boom and a stock market bubble not experienced since the 1920s. Stock market fluctuations notwithstanding, the global growth of the Internet has not abated since.
For all its impact, the Internet has touched only a relatively small portion of human existence, focused primarily on media, entertainment, telecom and more recently retailing and finance. The larger world in which we live, the world of things and physical interactions has, until now, been only lightly touched. But that is going to change – and change in a huge way.
Imagine Amazon on Steroids
The world of digital automation is at the same stage as the internet in 1993, when the Mosaic browser was introduced and we first discovered the wonders of the World Wide Web. The technologies are in place for a boom that will transform the global economy and, in the process, create new opportunities for better jobs and better lives. And once again the U.S. is asserting its leadership role in developing the critical technologies.
Today Amazon utilizes highly advanced predictive analytics and automation tools that plan … read the rest
Categories: Amazon, Automation, Business Acquisition, Business Sale, Economic Growth, Economics, Focus Investment Banking, Focus Investment Banking LLC, Focus LLC, Globalization, IIoT, Industries, Innovation, Internet of Things, Internet Retail, IoT, M&A, Mergers, Mergers and Acquisitions, Robotics, Software
Tags: Tags: Automate, Automation, Business Acquisition, Business Financing, Business Sale, Business Survival, Economics, Employment, Entrepreneurs, IIoT, Internet of Things, IoT, M&A, Mergers, Robot, Robotics
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Posted on June 16, 2015
Matt Porzio, Vice President of Strategy & Product Marketing for Intralinks has a unique perspective on the M&A market. Intralinks maintains the leading due diligence secure data room service in the world and, as such, has a window on a high percentage of global M&A activity as deals are being made. Additionally, Intralinks offers a global deal networking service, DealNexus, through which thousands of buyers are provided a window on available offerings, particularly in the middle market. Using this unique position Intralinks publishes quarterly its Deal Flow Predictor gauging future M&A announcements based on the trends its sees in the usage volume of its services. Matt’s observations on the current M&A market are presented below.
The M&A market for 2015 is looking bright – kicking off with a stellar start. According to Thomson Reuters, Q1 2015 saw over $854 billion in activity – the strongest quarter since 2007. Mid-market (deal valuation up to $500 million) deal volume was at $188.4 billion, with a year over year increase of 6.2 percent. From all indications, M&A will continue to be a leading growth strategy for companies, with rich exit multiples.
Multiple deal drivers are contributing to this rich environment, including activist pressure on strategics to tighten up balance sheets/refocus on core business lines. Distressed sectors such as oil & gas are bringing a sizeable number of mid-cap deals to market, and the strongest volume of Q1 cross border activity since 2007. Financial sponsors, with plenty of dry powder, are also out to market in full force. According to Thomson Reuters, Q1 saw $171.3 billion in sponsor-backed deals – again the highest volume since 2007.
With financial sponsors coming in with plenty of dry power, deal-makers entering this space must have deep pockets and creative earn-out mechanisms in place in order stay competitive in any M&A situation. … read the rest
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Posted on November 10, 2014
We recently interviewed Peter Lehrman, CEO of Axial, one of the most energetic and innovative companies providing advanced technology solutions to M&A and corporate finance professionals operating in the middle market. Speaking from the “Roosevelt Room” in Axial’s headquarters in the Flatiron District, Peter covers a good deal of ground and I highly recommend you listen.
We began with a discussion of the current M&A market and Peter shared with us some highlights of Axial’s recent Concord event in New York: a packed crowd listened to various Axial members and panelist experts on the middle market, but for some of them the main event took place outside the lecture hall.
Highlighting this heightened market activity, Peter shared some of Axial’s internal data showing a rapid rise in new deal submissions. In September over 1000 new deals were submitted to the Axial site, compared with a recent average of 750 submissions a month. Just-released data shows that October submissions grew again to more than 1200. No word yet on whether this will bridge the imbalance between buyers and sellers.
Axial recently completed an $11 million capital round with Comcast Ventures. Peter envisions this capital helping Axial become the go-to meeting place for all participants in middle market M&A. Their target community includes private and public companies as well as the professionals who advise them with regard to strategic relationships and transactions.
Although Peter was reluctant to share too much about his new product pipeline, he did share Axial’s vision for the role of technology in our industry. He firmly rejected the idea that robots and intelligent systems will replace smart and creative deal professionals in the M&A industry. Instead, he believes new systems and apps will make M&A professionals more effective by eliminating many of the more burdensome administrative tasks we now endure. My… read the rest
Categories: Axial, Banking, Business Acquisition, Business Sale, Focus Investment Banking, Focus Investment Banking LLC, Focus LLC, Innovation, Interviewees, Investment Banking, M&A, Mergers, Mergers and Acquisitions, Middle Market, Peter Lehrman, SaaS, Software
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Posted on October 16, 2014
We’ve previously reported that 2014 has witnessed a strong market with record valuations for many middle-market merger and acquisition transactions. This market strength has coincided with a powerful boom in public equity valuations as the S&P tripled from its 2009 lows. As the public equity market takes a breather, it’s time to consider the possible impact of a more significant equity market correction on middle-market M&A.
First, let’s take a look at the reality of the current situation – we are not in bear market territory for the overall market. That requires a 20% decline in value for the major Averages and as of this writing (October 14, 2014) we have only seen a drop of approximately 6%-7% in the broad market indices (S&P and Dow). For some specific sectors, however, this situation is not so sanguine. The energy sector, as measured by the XLE Energy Sector SPDR is now down more than 20%, offsetting gains in other sectors from the reduction in energy prices.
We certainly don’t have a crystal ball: while there is plenty of reason to believe that the current sell-off will continue for a while, we can make a good case that the market will move to new highs following the current sell-off. This has happened before; following the collapse of the Russian Ruble in 1998 and amid fears that one of the leading hedge funds of the era, Long Term Capital Management, would fail, the S&P suffered a precipitous 20+% drop from about 1200 to 950 in the summer of 1998. Yet the market quickly recovered and over the following 19 months the S&P climbed approximately 60% to an all-time high of 1500 in March of 2000. A similar trajectory today would show the S&P at 2500 and the Dow at 22,000 by the spring of 2016.
With that … read the rest
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Posted on August 26, 2014
You’ve got to know when to hold ’em
Know when to fold ’em
Know when to walk away
Know when to run
You never count your money
When you’re sittin’ at the table
There’ll be time enough for countin’
When the dealin’s done
If you’re a Baby Boomer, you remember well hearing Kenny Rogers’ iconic hit, The Gambler. If you’re like me, you’ve often wondered how Kenny’s advice might be applied to important business and investment decisions. If you’re a business owner who has survived our generation’s version of the Great Depression, you need good counsel more than ever.
Perhaps you’re feeling pretty good about your prospects – business is improving and profits are as high as you’ve ever enjoyed. Is now the time to go all in? Or is it time to cash your chips and leave the table for new faces? The story below presents a dilemma faced by many business owners. Names, industry identifiers and other client specific facts have been changed to protect confidentiality, but the dilemma described below is all too real and immediate for many business owners.
Our friend Frank Mayfield (not his real name) recently approached us with a dilemma. Frank founded Limbtronics, a medical device manufacturer, thirty years ago to provide leading orthopedic doctors with specialized tools for performing innovative surgeries on damaged joints and ligaments. Over time, he expanded into manufacturing surgical implants for complete joint replacements. The business has been good to Frank and in 2013 Limbtronics had a record year with revenue of $28 million and pretax profits of more than $5 million.
Over the past fifteen years, Frank has seen several of his competitors acquired by global orthopedic giants such as Medtronic, Stryker, Smith and Nephew, and others. He’s been approached a number of times, but never felt the time was … read the rest
Categories: Business Acquisition, Business Sale, Economics, Entrepreneur, Focus Investment Banking LLC, Investment Banking, M&A, Mergers, Mergers and Acquisitions, Middle Market, Private Equity, Small Business, Uncategorized, Valuation
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Posted on August 13, 2014
(Originally Published on Axial Forum)
The summer of 2007 was a great moment. We were enjoying one of the strongest booms in both the debt and equity markets that any of us had experienced in our lifetimes. Just the sort of markets we’ve been enjoying for the past year or so. The leveraged lending markets have fully recovered from their low point following the market crash of 2008 and 2009 and volume reached a new high in 2013. While market activity declined slightly in the first half of 2014 from the prior year, current activity levels remain very high.
The question of the day: Are we, like Bill Murray in Groundhog Day, destined to endlessly repeat this cycle with limited ability to prevent a repeat of the disaster that befell us in 2008-2009.
We’ve just interviewed one of the world’s leading authorities on the private debt markets to help us better understand the current state of the debt markets and what this portends for the level of deal activity going forward. Randy Schwimmer was a pioneer in developing middle market loan syndication markets in the 1980s, leading the effort for what is now J.P. Morgan and later BNP Paribas. With a small group of partners he formed Churchill Financial in 2007. They were successful in raising a $1.2 billion loan fund before the financial crash closed the markets and were left with more than $500 million of dry powder after the crash. Leveraging this success, they were acquired by Carlyle in 2011 where they began building that firm’s private debt business.
Randy has now left Carlyle to restart his weekly publication covering the private debt markets, which is now called The Lead Left. This has been a must read for years for anyone who wants to understand this arcane and somewhat opaque, … read the rest
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Posted on July 17, 2014
Since the 1970s, many of us have feared the threat of inflation looming just around the corner. Within the past year, economists and central bankers have led us to believe the inflation dragon has been permanently relegated to a dark hole, never to rain fire on the kingdom of men. We’re told that deflation is the real threat and that governments can continually run large deficits without reawakening the dragon. Recently, reality has intervened, however, to remind us that economists and central bankers aren’t infallible. U. S. Core CPI and global consumer prices have taken a sharp turn upward.
While this rate of price increase will have profound implications for business owners if it continues, that’s a story for another day.
Categories: Andy Greenberg, Banking, Business Acquisition, Business Sale, Economic Growth, Economics, Federal Reserve, Focus Investment Banking, Focus Investment Banking LLC, Focus LLC, Inflation, Investment Banking, M&A, Mergers, Mergers and Acquisitions, Middle Market, Monetary Policy, Monetary Stimulus
Tags: Tags: Business Financing, Business Owners, Business Ownership Transition, Business Sale, Business Survival, Economic Stimulus, Economics, Federal Reserve, Inflation, Money Supply, Private Equity, QE2, QE3, Quantitative Easing, Small business, Transition Planning
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Posted on February 3, 2014
Not only were prices in relation to earnings before interest and taxes (EBITDA) at an all-time high, leverage used in the transactions reached record levels as well. To some extent this reflects a skewing toward larger transactions, but unquestionably we are now back to levels not seen since the run-up to the 2008 financial crisis. History tells us that such heady price levels will not last forever.
So what is in store for 2014? Does weakness in global stock markets mean that the game is over? Or can we look forward to a sustained period of high valuations? Is the past is to be our guide, the current favorable trends in the M&A market have some time to run. We previously indicated that we felt market strength could run through 2014. Recently we have received confirmation of that through a uniquely qualified source.
IntraLinks is the global leader in virtual data rooms with a 30% worldwide market share. For the uninitiated a virtual data room is an online space in which due diligence documents can be securely placed during an M&A process to facilitate due diligence and other deal related activities. As a result IntraLinks has a unique perspective on the merger and acquisition marketplace. They see deals that are moving toward closing as much as six months before any public announcement of the transaction is made. IntraLinks has aggregated this proprietary business intelligence to … read the rest
Categories: Business Acquisition, Business Sale, Focus Investment Banking, Focus Investment Banking LLC, Focus LLC, Investment Banking, M&A, Mergers, Mergers and Acquisitions, Middle Market, Small Business
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Posted on August 26, 2013
Q4-2012 was a heady time for the M&A business and almost every observer of the industry expected 2013 to be the year the deals business broke out of its five year post financial crisis funk. Best laid plans and all that — the low level of deal activity that has occurred to date in 2013 has both surprised and disappointed most industry participants. Yet there are signs that this could change.
During H1-2013, deal volume fell off significantly, reflecting a cleared pipeline after the year end burst. Fortune reported that global M&A announcements for Q2-2013 were the slowest since Q3-2009. The U. S. market fared comparatively better, with the dollar value of announced deals up 34% year to year in H1 2013. European activity on the other hand collapsed 43% with the Euro crisis and continental recession still in full swing at the time. Even the relatively high level of U. S. activity depended in great part on the announcement of two large deals (Heinz and Dell) at the beginning of the year. Without those announcements the U. S. market would have appeared lackluster at best.
The middle market companies we represent depend on both strategic and private equity buyers for business exits. Most M&A industry observers believe that bulging corporate coffers and slow, organic growth will eventually dictate a strong increase in strategic M&A activity. With the exception of a few target sectors, particularly IT related businesses, this corporate gold rush has yet to materialize. As a result, private equity will be a more important source of buyside demand, at least for the near future.
PitchBook publishes a comprehensive analysis of U. S. private equity activity. Their first-half summary tells the story:
“Dealmakers were optimistic heading into 2013, anticipating one of the most active years for private equity (PE) investment since the financial … read the rest
Categories: Business Acquisition, Business Sale, Entrepreneur, Focus Investment Banking, Focus Investment Banking LLC, Focus LLC, Globalization, Investment Banking, M&A, Mergers, Mergers and Acquisitions, Middle Market, Small Business
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Posted on July 2, 2013
(Click on Picture to Watch Video)
Last month Chairman Bernanke spoke and the markets reacted by dropping more than 5% in a few days. Clearly he must have shared some very bad news for business owners.
Actually not! Coming into the year many observers thought that the federal budget sequester would put the economy at risk of stalling at best and dropping back into recession at worst. Instead the Fed now foresees annual economic growth at 2-2.5% this year, moving to as much as 3.5% by 2015. And it’s the private sector that’s carrying the load, not government programs.
Let me say that again. The Fed now believes that growth is going to accelerate over the next several years. As a result the economy may not need so much artificial stimulus (QE) going forward. The economy is no longer digging a hole; we’re back to building a foundation of real economic growth.
What does this mean for the deal business and for private companies considering M&A or corporate finance transactions? Bottom line: there is going to be much more demand for capital to fund growth. Unless the banks step up to the plate, which we believe is unlikely, this capital must come from private lenders and equity providers.
The good news is that there is a great deal of financial market capital available to meet this need. We just closed a mezzanine financing that gave us a good window into the market’s current appetite. Over the past few years, major investors have made significant financial commitments to entities designed to fill the void left by banks which have abandoned their commercial lending franchise. As a result today there are numerous private debt providers seeking opportunities to provide senior, hybrid and mezzanine capital to private companies. Where equity capital is needed, private equity groups are … read the rest
Categories: Alternative Financing, Asset Based Loans, Bank Credit, Bank Loans, Banking, Banks, Business Acquisition, Business Sale, Commercial Loans, Community Banks, Economic Growth, Economic Stimulus, Economics, Federal Reserve, Fiancial Regulation, Financial Services, Focus Investment Banking, Focus Investment Banking LLC, Focus LLC, M&A, Mergers, Mergers and Acquisitions, Monetary Stimulus, Private Equity, Revenue Based Loans, Shadow Banking, Tranche B Financing
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