Domestic transactions in October increased 9 percent when compared to the previous month and the value of those deals increased 93 percent when compared to September, according to S&P CapitalIQ. This is a positive sign for the market, but it may not continue.
With the current tax hikes effective in 2013, the upcoming year could be a rocky road. Of course, with trillions in cash and purchasing power available to both strategic corporate buyers and private equity groups, the unhealthy tax hikes may be counterbalanced with a need for higher yields, distribution of funds and accretive earnings.
On the private equity side, The Riverside Co. completed both an acquisition and an exit. Riverside’s portfolio company, SMS, completed the acquisition of a west coast respiratory equipment company in Premier Medical Corp. Riverside also sold Coeur Holding Co. to Illinois Tool Works.
Resilience Capital Partners completed two acquisitions, the first being the acquisition of CR Brands, a manufacturer of household cleaning and laundry products. Later in the month, Resilience acquired Advanced Communications Inc. through Aero Communications. Advanced Communications is a provider of telecom infrastructure services. Other notable private equity transactions for the month include Blue Point Capital Partners’ acquisition of California-based Smith-Cooper International, a producer and distributor of pipe, valves and fittings, and Morgenthaler’s sale of Avtron Industrial Automation Inc. to Japan’s Nidec Corp.
With respect to corporate buyers, both Steris Corp. and Parker Hannifin Corp. were very acquisitive in October. Steris closed two deals on Oct. 16 totaling $110 million. The businesses, Spectrum Surgical Instruments and Total Repair Express, are leading providers of surgical instrument repair services with combined revenues of approximately $72 million. Parker Hannifin also announced it would acquire two companies during the month and divest the automotive air conditioning portion of its Mobile Climate Systems Division to Germany’s ContiTech.
ALBERT D. MELCHIORRE is the president of MelCap Partners LLC, a middle-market investment banking firm. He is also a director on the ACG Cleveland board. For more information on MelCap Partners, please visit www.melcap.co. For more information about the Association for Corporate Growth, please visit www.acg.org/cleveland.
Deal of the Month
The deal of the month is awarded to our beloved Cleveland Browns and new team owner Jimmy Haslam III. Randy Lerner, the previous controlling owner of the Browns, agreed to sell the team to Haslam at the beginning of training camp in August. The deal closed on Oct. 25 for $1.05 billion after the NFL owners voted in favor of the transaction 32-0. Approximately $700 million for the team was paid current, giving Haslam 70 percent ownership of the team. The other 30 percent will be purchased in four years by Pilot Flying J for more than $300 million. After the return of the Browns to Cleveland in 1999, the team has only made the playoffs once, a trend that will continue this season. Hopefully, Haslam can add value to his $1 billion investment and bring a Super Bowl to the city of Cleveland — or at least wins against the Ravens and the team Haslam was previously involved with, the Steelers.