CCCA Economic Dashboard: November 29th, 2013

December 2, 2013 16:14 by Clayton Reeves in Capital Markets, Economy, Financing  //  Tags: , , , , , ,   //   Comments (0)
Attached is the CCCA economic dashboard as of November 29th, 2013. Click here to view a larger image.

CCCA Economic Dashboard: November 22nd, 2013

November 25, 2013 12:59 by Clayton Reeves in Capital Markets, Economy  //  Tags: , , , ,   //   Comments (0)
Attached is the CCCA economic dashboard as of November 22nd, 2013. Click here to view a larger image.

CCCA Economic Dashboard: November 15th, 2013

November 18, 2013 15:58 by Clayton Reeves in Capital Markets, Economy  //  Tags: , , , , , , ,   //   Comments (0)
Attached is the CCCA economic dashboard as of November 15th, 2013. Click here to view a larger image.

Justice Department Clears Merger of AA and US Airways

November 14, 2013 09:57 by Clayton Reeves in Capital Markets, M&A, Regulation  //  Tags: , , , , ,   //   Comments (0)
As reported in Deal Book, the Justice Department has cleared the $11 billion merger of American Airlines and US Airways. This paves the path towards creating the world's largest airline. The merger comes at the end of a tough period for airlines, which has seen high fuel prices, bankruptcies and labor issues. This is a new step in the industry's deregulation, and leaves only a few airlines that control the bulk of domestic and international flights. The remaining giants are American, Delta, United and United States domestic flight behemoth Southwest. The Justice Department claims that this merger will foster competition among market operators, but not everyone agrees. Transportation economics professor George Hoffer, from the University of Richmond, stated that the merger effectively removed one competitor from the market. He added that this could result in fare increases in many markets and fewer flights.  Investors, on the other hand, were obviously in favor of the deal, which creates a more formidable airline in the combined entity. All airline stocks were higher Tuesday, indicating that the market may agree with Dr. Hoffer on who wins from this deal. Read the full article here.

Pitchbook PE Deal Multiples Show Deal Multiples for Small Deals Falling

November 14, 2013 09:47 by Clayton Reeves in Capital Markets, Financing, M&A, Private Equity  //  Tags: , , , , , ,   //   Comments (0)
As reported by Pitchbook, PE transaction multiples were reasonably steady in Q3 2013. However, deal size showed significant changes. For example, median enterprise value (EV) for small deals (EBITDA<$25 million) fell from 5.0x in Q2 to 2.5x in Q3. On the flip side, EV/EBITDA multiples rose to 10.7x for transactions of $250 million or more, while revenue multiples fell to 1.7x, the lowest in over two years. So, what does this mean for the market? It means PE firms (and the market in general) continue to pay for profitability over pure sales. Market participants definitely want revenue growth, but they also want healthy margins and solid business models. Since companies with both are rare, PE firms continue to pay a premium on larger transactions. There is generally still no rush towards companies that show revenues, but lack profits, unless the growth story is compelling (i.e., Twitter).  Key statistics from 3Q 2013 explored in this report include: Median EBITDA multiple:6.81x Median debt percentage: 50% Average time to close a deal: 13 weeks Read the full report here.

Twitter Valuation Indicates Huge Growth Potential

November 7, 2013 09:49 by Clayton Reeves in Capital Markets  //  Tags: , , , , ,   //   Comments (0)
It looks like all eyes are glancing to the NYSE today, to see if the stock exchange can pull of the IPO of Twitter without the glitches and issues that plagued the Facebook IPO.  As reported by Dealbook, shares were priced at $26, making the valuation stand at more than $18 billion. The company will raise $1.8 billion from the offering, which should provide quite a pile of cash for acquiring new technologies and expanding into new markets. At this valuation, each Twitter user is worth an average of $78 - although I would estimate that Lady Gaga's account is worth quite a bit more than mine to advertisers! All things considered, the IPO has gone well for Twitter. However, in the harsh present day reality that internet companies live within, one misstep can spell real trouble. After all, Twitter has lost $300 million over the last three years, and probably won't show profits until 2015. If their users decline, or their revenues slack off estimates, it will be difficult to maintain this lofty valuation. Even so, investors are excited, and Twitter's pockets are lined with cash - the tell tail signs of a successful IPO. Read the entire article here.

CCCA Economic Dashboard: November 1st, 2013

November 4, 2013 14:35 by Clayton Reeves in Capital Markets, Economy  //  Tags: , , , , ,   //   Comments (0)
Attached is the CCCA economic dashboard as of November 1st, 2013. Click here to view a larger image.

CCCA Economic Dashboard: October 25th, 2013

October 28, 2013 16:52 by Clayton Reeves in Capital Markets, Economy  //  Tags: , , , ,   //   Comments (0)
Attached is the CCCA economic dashboard as of October 25th, 2013. Click here to view a larger image.

CCCA Economic Dashboard: October 18th, 2013

October 22, 2013 10:20 by Clayton Reeves in Capital Markets, Economy, Financing  //  Tags: , , , ,   //   Comments (0)
Attached is the CCCA economic dashboard as of October 18th, 2013. Click here to view a larger image.

Increasing Seed Valuations Making Series A Rounds Difficult

October 18, 2013 08:55 by Clayton Reeves in Capital Markets, Economy, Financing, M&A, Private Equity, Venture Capital  //  Tags: ,   //   Comments (0)
As reported by Pitchbook, seed valuations have increased 62.5% from 2009 through the first three quarters of 2013 for a cumulative annual growth rate of 13.8%. Meanwhile, Series A valuations are increasing, but at a slower rate, from $6.8 million in 2009 to $8.9 million. This 30.8% growth represents an annualized rate of 10.3%. Inflated seed-stage valuations may be having an effect on a startup's ability to raise funding in the Series A round, as seed investors want to see appreciation in their investment, while Series A investors believe the seed valuation was too high. Source: Pitchbook As seed-stage investments increase, companies are finding it more difficult to raise Series A financing.  This is at least partly due to a shift in VC investment philosophy, which has seen the share of seed-stage investments grow as a proportion of total VC investments over the last three years.  VC firms are trying to pick out winners earlier, and get them for a reasonable price.  The competitive bidding, however, is causing those valuations to increase.  It will be interesting to see how this plays out over the next several years, and if the Series A crunch will continue. Read the entire article here.

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