While the wheeling and dealing continues at Cleveland’s new casino, the pace of activity on the business transactions front is a bit more sluggish. According to S&P CapitalIQ, the number of disclosed domestic M&A deal closings in May fell 6 percent and 29 percent, compared to April 2012 and May 2011, respectively. In Northeast Ohio, S&P CapitalIQ reported 18 closed deals in May, down from 19 in April 2012 and down from 23 in May 2011.
Globally, stock markets dropped 5 to 7 percent in the month of May. But in terms of deal value, May saw the highest totals it’s seen since October 2007. The trailing 12-month purchase price per domestic transaction as of May 2012, excluding extraneously large deals (typically those greater than $5 billion in deal value), was $112 million, according to S&P Capital IQ and MelCap Partners. The average purchase price for the month of May, excluding large transactions, was $131 million.
One of the biggest deals of the month locally was Eaton Corp.’s intention to purchase Cooper Industries plc for $11.8 billion. Cooper is a leading supplier of electrical equipment. The deal is expected to close in the second half of 2012 and combined revenues will be over $21 billion.
Things Remembered Inc., owned by GB Merchant Partners LLC and Bruckmann, Rosser, Sherrill & Co. L.L.C., was sold for $295 million to Chicago-based private equity firm Madison Dearborn Partners LLC. Things Remembered is headquartered in Highland Heights and employs more than 4,000 people.
The M&A markets are still poised for growth, despite the numbers showing a slight downtick from prior periods. There is still time left for a good showing in 2012 and plenty of seats open at the deal table.
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 a company that truly embodies the classic American dream of building a business and selling it. Watteredge Inc. has been in business for more than 60 years and has experienced rapid growth over the course of the last decade. On May 31, the company was sold to Coleman Cable Inc. Watteredge designs, manufactures and sells secondary power connectors, including electric arc furnace cables, resistance welding cables, industrial high-performance copper bus bars and other high performance devices and accessories.
“This acquisition immediately expands our product platform and allows us to provide an entirely new line of highly engineered industrial products across a number of end markets,” says Coleman’s CEO G. Gary Yetman.
The American dream is alive and well.