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M&A Insights – Mark Young, Managing Partner, CKS Advisors

Welcome to the April edition of M&A Insights 2018.  Our goal at CKS Advisors is to help you and your clients stay up-to-date on the current Merger and Acquisitions climate.

This month’s report is an excerpt from: Pepperdine Private Capital Markets Report by Craig R. Everett, PhD.   Click here for April M & A Report

The report highlights the state of private capital markets in 2017 with a focus on Middle Market M&A activity.

Key Points:

  • The top three reasons for deals not closing are valuation gaps (36%), unreasonable seller/buyer demands (20%), and no market for the business being sold (11%)
  • The top three industries where deals are closing are manufacturing (17%), business services (15%), and healthcare/biotech (13%)
  • The average EBITDA multiple for companies with $1m-$5m of EBITDA is 5.6x with larger companies garnering the higher-end of the multiple range.
  • 56% of buyers were strategic buyers and 44% were financial buyers

 

Our two takeaways:

  • Due to higher volume of strategic buyers seeking synergistic investments and private equity groups pressured by Limited Partners to spend their dry powder- valuations remain historically high at an average of 6.0x for companies with $1m-$10m in EBITDA.
  • Building off the March M&A Insights and the information above, the amount of dry powder available from Private Equity groups makes it easy for a well-run company to find a strong buyer- especially in the $1-10m EBITDA range.

Stay tuned for more brief updates on M&A activity in the future.

If you or a client would like to learn more about the M&A market or is ready to explore opportunities, we would be glad to meet. You can contact me at 480-351-8533 or myoung@cksadvisors.com.