Competitive dynamics in the current environment suggest it is a seller’s market for high-quality businesses. Buyers are flush with cash, credit markets are wide open for business and valuations are rising.
The capital markets are white hot, lifting valuations of publicly traded companies. Broad market indices are at record highs, with the Standard & Poor’s 500 index and Dow Jones Industrial Average up 21 percent and 18 percent, respectively, through the year-to-date period.
In the low interest rate environment, buyers can afford to pay more, and are, as lenders accommodate higher leverage and borrower-friendly terms.
Private equity database PitchBook reported in its 2H 2013 Middle Market Report that the middle market median enterprise value to EBITDA multiple reached 10.5x in June 2013, supported by a median debt multiple of 6.1x — both decade highs. Purchase price multiples for strategic and financial buyers reached their highest level since the market peak in 2007, according to October data reported by S&P Leveraged Commentary & Data.
Companies that weren’t ready to go to market in 2012 because they needed another year of seasoning may now be primed to take advantage of favorable conditions. Valuations continue to be very competitive, so it is a good time to be a seller. ●
Andrew K. Petryk is managing director and principal of Brown Gibbons Lang & Co. LLC, an investment bank serving the middle market. Contact him at (216) 920-6613 or firstname.lastname@example.org.
Nanofilm Ltd. of Valley View announced it was merging with Applied Nanotech Holdings Inc. in a stock swap transaction. Nanofilm is a leading developer in nanotechnology with a leading market position for specialty optical coatings, cleaners and nano-composite products.
Empire Die Casting Co. Inc. of Macedonia received a letter of intent to be acquired by New Growth Capital Group. Empire Die Casting manufactures aluminum and zinc die cast parts for diverse applications including automotive, aerospace, medical equipment, home appliance and electronics. The company filed for Chapter 11 bankruptcy protection in October 2013.
The Riverside Co. acquired NJoy Baby S.L., expanding Riverside’s existing Baby Jogger platform. Based in Barcelona, Spain, NJoy is a designer and developer of strollers and related accessories that is best known for its innovative reversible umbrella stroller. Riverside also acquired employee-training company Catalyst Awareness, an add-on to Alchemy Systems platform. Riverside tallied 4 acquisitions in the month and 15year-to-date.
Linsalata Capital Partners and PNC Erieview Capital exited Royal Baths Manufacturing Co. Ltd. in a sale to Cotton Creek Capital Management LLC. Houston-based Royal makes acrylic and cultured marble bathroom products, including soaker and whirlpool bathtubs, vanity tops, sinks, shower walls and bases. Linsalata acquired the company in 2003.