This month’s issue of the monthly executive brief providing M&A market insight for C-level management and their professional advisors.
As we close the books on 2012, one word sums up the M&A market during the past twelve months...uncertain. No market likes uncertainty and last year was fraught with it, from the US election and Eurozone to the looming “fiscal cliff”. 2012 saw a decline in M&A activity by both strategic and financial investors. Lack of opportunity had little to do with the malaise. Balance sheets were cash rich, private equity firms had stockpiles of “dry powder” to spend, and the credit markets were poised to be helpful. However, M&A activity moved through the year in a downward trend.
Valuations crept up as the year progressed and best in class performers saw multiples rebounding to the highest levels seen in nearly ten years. It was a seller’s market, with competition stiff for well performing companies. Healthcare, manufacturing, energy and technology attracted the attention of investors and finished the year strongly.
2012 was a good year to sell a business.
What’s on the horizon for 2013? With the US election over and issues of the “fiscal cliff” soon to be decided, we could see a slow first quarter as the market adjusts. But corporate balance sheets are still ripe with cash and private equity firms still sit with “dry powder” to spend. Even if corporate buyers take risk adverse postures toward investing, the private equity community will be looking to add growth opportunities to their portfolios. It’s what they do. It just a question of how strongly they will spend and where their investment dollars will be put to work.
2013 will also be a good year to sell a business.
For more information contact:
Douglas Nix, CA | Vice Chairman CFA
905 845 4340 ext. 211