M&A: Deals in 2013, Expectations for 2014
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The document summarizes M&A outlook and trends for 2014. Strategic acquirers and private equity firms have large cash reserves and access to low interest rates, fueling increased deal activity in 2014, especially in the middle market. The sectors expected to see the most deal activity in 2014 are healthcare, technology, energy, and manufacturing. Valuations remain high across industries, though some uncertainty remains around regulatory changes and energy prices. Leveraged buyouts using debt remain popular transaction structures.
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M&A: Deals in 2013, Expectations for 2014
- 2. M&A Outlook Presenter Logo here • Strategic Acquirers • Increasing international interest in Houston • Sale of Excel Engineering to Ramboll • A “Second Bite of the Apple” • Second bite almost as big as first… • What if I get a knock at the door? • Hybrid approach Copyright © 2014.
- 3. M&A Outlook Presenter Logo here Investors Looking to Put Capital to Work • Investors wary in 2013 due to uncertainty surrounding ACA, monetary policy and economic environment • Private Equity ended 2013 with a record high $1 trillion of dry powder… 2013 cited as best year for PE fundraising since financial crisis • Meanwhile, strategic buyers continue to hold large amounts of cash Copyright © 2014.
- 4. M&A Outlook Presenter Logo here Increased activity in 2014 • Deal activity fueled by: • Large cash reserves • Interest rates at historic low • Improved consumer confidence • Opportunities in emerging markets • Middle market expected to be most active sector • 77% of 2014 deals expected to fall in the middle market (KPMG) • Smaller deals easier to finance and integrate Copyright © 2014.
- 5. M&A Outlook Presenter Logo here Which Sectors are “Hot”? • Investors predict 4 industries having most potential for growth in 2014: • Health care • Technology • Energy • Manufacturing • Changing regulations in healthcare and financial services, increased O&G production and evolving world of technology will increase investment opportunities Copyright © 2014.
- 6. M&A Outlook Presenter Logo here Energy/O&G Sector • M&A Drivers: • New technology • Geographic growth • Product/service growth • Customer growth • Challenges: • Regulatory uncertainty • Valuation disparities • Volatile energy prices • Inability to forecast future performance Copyright © 2014.
- 9. Presenter Logo here M&A Outlook Size Premium TEV 2003-08 2009 2010 2011 2012 2013 YTD Total N= 10-25 25-50 50-100 100-250 5.4 6.1 6.7 7.7 4.9 6.2 6.5 8.8 5.3 6.1 6.8 6.8 5.2 5.8 7.4 7.5 5.5 6.3 6.6 7.5 6.0 7.7 7.2 6.0 5.4 6.1 6.8 7.6 312 266 196 62 Total 6.1 5.9 6.1 6.1 6.2 7.0 6.1 836 N= 479 29 73 93 131 31 836 Please note that N for 2003-08 encompasses six years of activity 2013 Data is through 3Q . Source: GF Data Copyright © 2014.
- 10. Presenter Logo here M&A Outlook TEV/EBITDA – By Industry INDUSTRY 2003-08 2009 2010 2011 2012 2013 YTD Manufacturing Business services Health care services Retail Distribution Publishing/ Media Technology Other 5.9 6.1 6.7 6.5 6.0 7.4 5.7 5.7 5.7 5.8 6.3 5.2 5.6 7.4 6.6 6.4 5.9 6.0 6.7 5.5 5.4 4.2 5.5 5.7 6.0 6.5 7.4 6.1 6.0 6.1 8.1 5.1 5.9 5.8 7.3 6.3 6.3 11.4 7.4 6.3 5.8 6.6 7.7 5.1 7.6 5.9 NA 6.7 N= 964 91 191 193 228 73 Total N= 5.9 6.1 6.9 6.3 6.0 7.3 6.3 5.8 749 310 165 54 186 33 38 205 1740 Please note that N for 2003-08 encompasses six years of activity. 2013 Data is through 3Q Source: GF Data Copyright © 2014.