Expertise Beyond the Numbers

Are We Nearing the End of A Strong M&A Run? Key Insights from the ACG M&A East Conference [Blog Post]

SC&H Capital principals Matt Roberson and Greg Hogan attended the Philadelphia Association of Corporate Growth (ACG) M&A East Conference in mid-October.

M&A East is an annual two-day M&A and corporate growth conference, where deal professionals meet to connect with industry leaders, source deal flow, and secure financing. Dealmakers from around the country converge for M&A East’s annual Private Equity Marketplace, featuring 90+ exhibiting Private Equity (PE) firms representing more than $125 billion all under one roof.

During the conference, Matt and Greg spoke with many of the 1,300 deal professionals in attendance, including various PE firms and corporate buyers.

Are we nearing the end of a strong M&A run? Here are some of the key takeaways from the event on the current state of the sell-side and buy-side M&A market:

  • PE continues to be hungry for good investment opportunities.
    • Middle market deal volume in 2015 has been relatively consistent with that of 2014 (our statistical analysis confirms this information). The general sentiment of PE is that deal quality has declined somewhat.
    • This decline has intensified market competition among PE buyers as they seek to acquire companies with sustainable competitive advantages operating in attractive niche markets.
  • Many PE firms think we could be nearing the end of a very strong M&A run. With looming interest rate increases, a decline in the number of high quality deals, and public stock market volatility, the general discussion is not if this strong M&A environment will end, but rather when.
    • That said, a large number of PE buyers we spoke with are in the process of raising new funds. Many of the newly raised funds are larger than their current funds.
    • We believe PE is taking advantage of significant liquidity available to capture new funds before the market changes.
  • Multiple PE groups are following the same concept – “If it’s not bolted to the floor, we are selling it.”
    • With a potential market slowdown on the horizon, PE firms continue their torrid pace of selling portfolio companies to realize their returns now while the buyer market still has momentum.
  • The pace of M&A activity will likely continue at the current level through next year’s presidential election before facing rising downward market pressures.

While we never truly know what the future holds, it’s not a matter of if the strong run will end, but when. We will continue to keep you updated on the pulse of the M&A market as events unfold.

Are you a business owner interested in exploring your M&A options? Or, are you a corporate buyer or PE firm interested in discussing potential acquisition targets? Fill out our contact form here if you would like Matt or Greg to reach out to you directly and discuss your M&A options.