CCCA Economic Dashboard: July 19th, 2013

July 22, 2013 15:44 by Clayton Reeves in Capital Markets, Economy, Financing  //  Tags: , , , , ,   //   Comments (0)
Attached is the CCCA economic dashboard as of July 19th, 2013. Click here to view a larger image.

The Rise of Private Public Partnerships

July 18, 2013 14:53 by Bill Conway in Capital Markets, Economy, Energy, M&A, Natural Gas, Private Equity, Regulation, Telecom, Utilities, Water  //  Tags:   //   Comments (0)
Establishing Private Public Partnerships (P3) should have the attention of many municipal organizations across the country since, even in good economic conditions, infrastructure assets are not the highest and best use of a cities limited resources. [More]

Is Venture Capital Deal Making Hitting a Bottom?

July 17, 2013 10:29 by Clayton Reeves in Capital Markets, Financing, M&A  //  Tags: , , , , ,   //   Comments (0)
The pace of VC investment has gradually decreased in recent quarters, and we continued to see that trend in the second quarter of 2013.  Only 778 deals were completed during the quarter, which would represent the second fewest since Q4 2009.  The number has been below 1,000 deals for the last year, after reaching that point through all of 2011 and the first half of 2012.  With all the bad news, is there light at the end of the tunnel? Perhaps. Pitchbook believes the Q2 numbers will increase roughly 15% to account for deals that were not captured/reported in their initial round of research.  This would put the quarter more in line with the previous three quarters.  Furthermore, capital invested 11%, reaching $7.9 billion, the highest since the same quarter last year. Now, this may be a case of finding small positives in a trend that is undeniably flat at best.  However, if VC is hitting a bottom, there is plenty of dry powder available for deals to pick back up. Read the complete report here at Pitchbook.

CCCA Economic Dashboard: July 12th, 2013

July 15, 2013 17:39 by Clayton Reeves in Capital Markets, Economy, Financing  //  Tags: , , ,   //   Comments (0)
Attached is the CCCA economic dashboard as of July 12th, 2013. Click here to view a larger image.

First Half of 2013: PE Deal Flow Continues to Struggle

July 11, 2013 11:59 by Clayton Reeves in Capital Markets, M&A, Private Equity  //  Tags: , , ,   //   Comments (0)
For dealmakers, 2013 was primed to be an active time with optimism returning to markets and dry powder being expended in the form of M&A transactions.  In terms of the private equity, this did not come to fruition during the first half of the year. According to Pitckbook, deal flow continued to be stagnant through June of this year. You can see below the drop in number of deals from 1,148 in second half 2012 to 738 in first half 2013.     The monthly figures are similarly stagnant.      Despite an apparent uptick in capital invested in June, the underlying numbers tell a different story.  The $23 billion acquisition of Heinz has almost singlehandedly increased the capital invested over the prior four month average. There are several reasons we might be seeing this softness.  First, many of the deals that would've been littered across the first half of 2013 were rushed to completion in the last half of 2012, for tax purposes.  Furthermore, the optimism that we expected to guide M&A recovery has also spurred increases in equity prices, thus keeping multiples high.  In an already challenging environment for buyers, this has made closing a deal even more difficult.  There is hope, however.  Some professionals are seeing increased activity during the first half of 2013, although they said that the fruits of these labors would not be seen until later in 2013. Read the rest of the Pitchbook report here.

Retail M&A Showing Signs of Life?

July 10, 2013 17:20 by Clayton Reeves in Capital Markets, M&A  //  Tags: ,   //   Comments (0)
Although year to date M&A has been sluggish in many sectors, today marks the second large deal in the retail space this week. First, grocery giant Kroger announced a definitive merger agreement with Harris Teeter. Kroger will pay $49.38 in cash in a deal that is valued at roughly $2.5 billion. Harris Teeter brings 212 stores to the table, as well as annual revenues of $4.5 billion.   Then today, OfficeMax shareholders voted overwhelmingly in support of the merger with OfficeDepot. The combined entity hopes to compete with market leader Staples, and will have revenues in excess of $18 billion. Office Depot also divested their business in Mexico for roughly 8.7 billion pesos in cash.  This will improve their liquidity position headed into the merger with OfficeMax. The activity in retail and the size of these two deals is a hopeful sign in a market that needs to build some deal momentum in the second half of the year.

Chinese Investment in the U.S. Continues to Grow

July 10, 2013 09:32 by Clayton Reeves in Agriculture, Capital Markets, M&A  //  Tags: , , , , ,   //   Comments (0)
Despite political, regulatory, cultural and geographic obstacles to Chinese firms investing in the U.S., they continue to do so at a growing rate. Chinese figures show that their investment in the U.S. grew to $9.3 billion in 2012 from $1.88 billion in 2007. U.S. figures were even more extreme, concluding that the cumulative investment jumped from $3.4 billion to $22.8 billion in the same period.  The recently proposed acquisition of Smithfield Foods by Shuanghui International for $4.7 billion would represent the largest ever acquisition of a U.S. firm by a Chinese entity. Additionally, this acquisition could represent a threat to the U.S. food supply, which has generally been more protected through regulatory issues due to national interests. With many of the food related issues that Chinese firms have faced, either in the pet or human food arena, there is concern from regulators about the acquisition of Smithfield. Regardless of how the Smithfield acquisition turns out, one fact remains: the Chinese are interested in purchasing U.S. companies moving forward and have the dry powder to do so.  It will be interesting to see how this changes the M&A landscape moving forward. Click here to read the article this post references in the China Daily.

CCCA Economic Dashboard: July 5th, 2013

July 8, 2013 17:04 by Clayton Reeves in Capital Markets, Economy  //  Tags: , , ,   //   Comments (0)
Attached is the CCCA economic dashboard as of July 5th, 2013. Click here to view a larger image.

Tenet Announces Acquisition of Vanguard

June 25, 2013 12:58 by Clayton Reeves in Capital Markets, Healthcare, M&A  //  Tags:   //   Comments (0)
Tenet has announced that they will acquire Vanguard Health Systems in a deal valued at $4.3 billion including the assumption of $2.5 billion in Vanguard debt. The deal is expected to close by the end of this year. Tenet anticipates annual synergies between $100-200 million. The offer price of $21 represents a 70% premium to Friday's closing price of $12.37 a share. The combined entity would form the second largest for-profit hospital in the country. The transaction will be financed by BoA, including a recapitalization of the existing Vanguard debt at attractive rates. (Reuters) The EV/EBITDA multiple came in at ~11.6x, using March '12-13 numbers (Yahoo! Finance), which is higher than the 8x EBITDA that many hospitals are trading at.  Healthcare continues to be a hotbed for acquisitions, as large players like Tenet expand aggressively. According to Healthcare Daily, Greg Koonsman, a senior partner at VMG Health in Dallas, recently said that “systems offensively and defensively are getting bigger. There is a lot of vertical integration. It’s Business 101. They are getting bigger at any cost... There is a lot of capital chasing few sellers right now. However, about 2,000 (of the nation’s 5,300 hospitals) should be for sale.” Looks like we will continue to see activity in the healthcare sector.

PE Firms Finding Exits Easier Than Investment Opportunities

June 25, 2013 12:33 by Clayton Reeves in Capital Markets, M&A, Private Equity  //  Tags:   //   Comments (0)
In an article on Dealbook today, this year $62 billion worth of deals larger than $1 billion have been announced, according to Thomson Reuters. That seems to be a positive indicator, as it represents a higher value than all of 2012; however, the purchase of the Heinz Company ($27 billion) and Dell Inc. ($18 billion) are atypical. Heinz was driven more by the oracle, Warren Buffett, than by private equity, and the purchase of Dell was driven by Michael Dell buying back the company bearing his namesake. According to Preqin research, the industry has $187 billion of dry powder available, which could amount to more than $700 billion of deals. Without the two atypical deals mentioned above, however, 2013 has seen only five deals amounting to $16 billion. The crux of the issue seems to be a lack of confidence in current valuations and wary attitudes regarding private equity by potential sellers. Regardless of these hurdles, the piles of cash sitting in the coffers of PE should find their way to the market by one avenue or another. It remains to be seen when that dry powder will ignite large deal volume.

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