M&A Activity Slows in Orange County

According to the Orange County Business Journal, February 20, 2017 edition, mergers and acquisitions activity has slowed somewhat in the mid-market and lower mid-market companies. M&A deals sank from $31 billion in 2015 (exclusive of two enterprise deals-Broadcom and Sandisk), to $28 billion in 2016 (these figures exclude real estate transactions and healthcare facilities).

Reasons for the lower M&A activity include:

  • The Federal Reserve increasing interest rates that made debt deals more expensive
  • Asset prices trending too high during the eighth year of the current economic recovery
  • Deal makers seemed to wait to see the outcome of the Presidential election and how that would impact the business environment and valuations.

The key contributing factors that enable M&A deals to occur include:

A) An abundance of capital
B) Receptive markets to higher valuations
C) Sustained low interest rate environment
D) Expanding, favorable stock markets

Different from 2014 and 2015 when all business sectors seemed to rise in uniform, in 2016 a change occurred and capital became more discerning. In Orange County in 2016, 80 technology companies were acquired, 56 industrial / manufacturing company deals were completed, 55 consumer product companies and 44 healthcare companies were acquired.

Deals that are the most attractive and pull in the capital at the highest valuations are companies with high growth rates and large markets. There were 278 acquisitions completed for privately-held companies in 2016 versus 323 deals completed in 2015. Acquisitions of public companies in 2016 were flat at thirteen deals.

CEO Advisor, Inc. provides mergers and acquisitions and growth capital advisory services to grow your company to the next level. Mark Hartsell has over thirty years of experience in buying and selling companies coupled with the business expertise to meet your growth and exit strategy plans. Please contact Mark Hartsell, MBA, President at (949) 629-2520, by email at MHartsell@CEOAdvisor.com, or visit www.CEOAdvisor.com for more information.TrendingDownArrow

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