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DealMarket Digest Issue91 - 19th April 2013


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- New Study: What Happens When Deals are Leaked
- Investment in Clean Energy Trends
- Good News for US Startups: Angel Investment Stabilizes
- PE to Push European M&A Deal making in 2013
- Candle Company Attracts Buyout Offers of up to USD 2 billion
- Quote of the Week: Personal Flight

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DealMarket Digest Issue91 - 19th April 2013

  1. 1. DIGEST 91SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 91April 19, 201312New Study: What Happens WhenDeals are LeakedInvestment in Clean Energy TrendsGood News for US Startups: AngelInvestment StabilizesPE to Push European M&A Dealmaking in 2013Candle Company Attracts BuyoutOffers of up to USD 2 billionQuote of the Week: Personal Flight34
  2. 2. STUDY: WHAT HAPPENS WHENDEALS ARE LEAKEDIn the world of M&A it is a fact that information about deals often gets leaked to the press. A new studyshows that leaded deals take longer and are less likely to complete. According to a report by M&AResearch Centre at Cass Business School in London, and Remark while the number of M&A deals thatleak has declined dramatically over the last two years, the risks from leaking are rising, as well asregulatory pressures. Researchers examined more than 4,000 transactions between 2004 and 2012, aswell as interviewed M&A practitioners in Europe and the US.Key Findings• Most deal leaks are deliberate, with leaking by sellers responsible for driving higher bid premiums andleaking by bidders or third parties done to terminate bid discussions.• The number of deal leaks has been falling.• There has been a drop in leaked deals from a peak of 11% during 2008-2009, to 7% during 2010-2012.• The study found that on average leaked deals took over a week longer to close than those that did notleak. In addition, in the last two years, leaked deals were 9% less likely to actually complete than dealsthat were not leaked.• Leaking news is much more common in EMEA, particularly the UK, than in the US, though the gap isshrinking fast.• Leaked deals that actually close are more likely to be good deals for both seller and acquirerINVESTMENT IN CLEAN ENERGY TRENDSInvestment worldwide in the first quarter of 2013was down 22% on a year earlier, due to a downturnin large wind and solar project financings, accordingto Bloomberg New Energy Finance (BNEF). Thefigure is still a stunning USD 40.6 billion. Last year’stotal investment was also down from a peak in2011. Investment dropped by 11% to USD 269billion for the year. The drop in the last eighteenmonths comes as a result of the ending of a numberof significant support programs launched bygovernments in the aftermath of the financial crisiscome. Also contributing to the fall is theplummeting cost of clean energy technology.Activity has been high in terms of how many megawatts of capacity were installed, but not so much indollar terms. BNEF warns that for a reduction greenhouse gases, an investment level would have todouble to reach the goals set for 2020. It also said that the first quarter is typically lower and notnecessarily an indication of how the activity will proceed the rest of the year.
  3. 3. NEWS FOR US STARTUPS: ANGELINVESTMENT STABILIZESThe latest Halo report says angel investing for the year was stable and comparable with prior years. Premoney valuations for early-stage companies remained steady at USD 2.5 million and round sizes wererelatively consistent. The Halo report is from The Angel Resource Institute, Silicon Valley Bank and CBInsights and is based on a survey of US-based angel group investment activity.Other findings• The sectors and geographies getting funding are shifting - most notably, mobile and telecom companiesare gaining share of angel investment deals and dollars• Healthcare companies are losing share of angel investments.• Companies in the Northwest and the Southwest US are gaining ground on the number of deals andtotal investments they receive over companies in California and New England.• Median angel round sizes hit a five quarter high at USD 690,000 in Q4 2012 for the second quarter in arow. When angel groups co-invest with other types of investors, the median round size is higher at USD1.5 million.The trends in valuations, growth in investment size, and wide geographic activity among angel investors isevidence that angels are a reliable and a critical part of growing the next generation of great newcompanies, concludes the reportImage source: Helo Report Infographic
  4. 4. TO PUSH EUROPEAN M&A DEALMAKING IN 2013A new survey by Roland Berger onM&A sentiment in 2013 says that justover half of those surveyed are slightlyupbeat about the development ofprivate equity-driven M&A this year.The report says that a substantialimprovement is expected in theavailability of attractive acquisitiontargets. The situation in the financialmarkets and the development of theeuro crisis are expected to improveslightly.Some 52% of those surveyed expect tosee an increase in the number oftransactions. Scandinavia and Germanyare seen as the leading countries for growth of private equity-driven M&A activity in 2013. Poland, the UKand CEE should grow slightly as well, while declines are expected in Iberia, Italy, France and GreeceThe sectors in favor are Pharma/Healthcare and Consumer Goods/Retail. Energy/Utilities as well asTechnology & Media sectors are ranked second. At the bottom of the list are Automotive andBuilding/Construction. The mid-cap segment is forecast to dominate with a whopping 91% of therespondents expecting most deals businesses with values of less than EUR 250 million.PE TO PUSH EUROPEAN M&A DEALMAKING IN 2013This week’s deal of the week is a USD 2 billion buyout for YankeeCandle. The US company has attracted offers from several privateequity firms, according to unnamed sources, according to anexclusive by Reuters.Some of the bidders are said to be Bain Capital, AdventInternational., CVC Capital Partners., Clayton, Dubilier & Rice andAres Management. The company is owned by Madison DearbornPartners, another buyout firm, which acquired Yankee Candle in2006 for USD 1.6 billionImage source: Yankee Candle website.
  5. 5. top 10 private equity managers control more than half of USD 959 billion in PE assets undermanagement by the 50 largest managers, according to a report in PI Online. The three largest, OaktreeCapital Management, KKR and Bain Capital control almost a quarter of that total. Most of the managersin the top 10 are household names, and half of them are public. Information for the report came directlyfrom the firms, their filings with the Securities and Exchange Commission and their websites. There isalso data about exits and new fundraising by the top 50 PE companies worldwide. Interestingly, theresearchers found that size does not matter when it comes to fundraising. Performance is what matters.THE TEN LARGEST PE COMPANIESCONTROL HALF PE AUM“The first footage I saw of the Martin Jetpackwas interesting to me as an aviator, but it wasclearly limited in its commercial application.Recently, the company achieved a number offlight technology breakthroughs with theirlatest generation Jetpack and that’s when Ireally sat up and took notice. The team havecreated an aircraft that is fast, agile, and stablewith a huge number of applications across anumber of sectors.”Who said it: newly appointed CEO of MartinJetpackQUOTE OF THE WEEK: PERSONAL FLIGHTIn context: The quote appeared in a press release this week. In a local news report the venture-capitalbacked New Zealand based Martin Aircraft Company was said to be mulling an IPO. It is about to releasethe First Responder Jetpack, a personal flight developed for police, search and rescue and othergovernment uses. A slightly modified version, the Personal Martin Jetpack, would be released in 2015.The company is raising funds of ahead of a potential IPO this year. The public offer is to fund theestablishment of manufacturing operations and sales and marketing staff around the world.It is not the only jetpack company on the market. Jetlev’s water-propelled Jetpack has also been getting alot of press lately. It looks like personal flight is not only the stuff of cartoons and Hollywood moviesWhere we found it: Martin Jetpack website
  6. 6. DealMarketDealMarket launched in 2011 and is growing fast. Just one year afterlaunch, DealMarket counts more than 52,000 recurring users from 154countries, and over 3,000 deals and service providers promoted or listedon the platform.DealMarket is an online platform enabling private equity buyers, sellersand advisors to maximize opportunities around the world – a one-stopshop for Private Equity professionals. Designed by Private Equityprofessionals for Private Equity professionals, the platform is easy to use,cost effective and secure, providing access, choice and control across theinvestment cycle.DealMarket’s offering includes• DealMarketPLACE, an unfiltered view of the global deal and advicemarketplace, where searching is free and postings are the price of acappuccino a day (with no commission).• DealMarketSTORE offers affordable access to industry-leading third-partyinformation and services on demand; and• DealMarketOFFICE is a state-of-the-art deal flow management tool,helping Private Equity investors to capture, store, manage and sharetheir deal flow more efficiently.DealMarket was voted the “Best Global Private Equity Platform for 2013”by Corporate Newswire.www.DealMarket.comThe Dealmarket Digest empowers members of Dealmarket by providingup-to-date and high-quality content. Each week our in-house editor siftsthrough scores of industry and academic sources to find the mostnoteworthy news items, scoping trends and currents events in the globalprivate equity sector. The links to the sources are provided, as well as aneditorialized abstract that discusses the significance of the articlesselected. It is a free service that embodies the values of the Dealmarketplatform delivers: Professional, Accessible, Transparent, Simple, Efficient,Effective, and Global.To receive the weekly digest by email register on Valerie Thompson, Zurich