Merger Monday: $50 Billion in Deals Announced in 24 Hour Period

July 29, 2013 17:17 by Clayton Reeves in Capital Markets, Financing, M&A  //  Tags: , , ,   //   Comments (0)
For those who slept through the last 24 day, boy has it been a busy time! As reported by USA Today, there were nearly ~$50 billion in deals announced over the past 24 hours - The fashion chain Saks was acquired by Canadian retail giant Hudson's Bay in a deal valued at $2.9 billion - U.S. drug maker Perrigo bought the biotech firm Elan in an $8.6 billion deal. - Allbritton TV stations were purchased by broadcaster Sinclair in deal valued at almost $1 billion. - Michael Baker has decided to sell itself for $392 million, $40.50 a share, to IMS, a privately held provider of professional, engineering and other services. This represents a 37% premium on Friday's closing price. - In a deal that would create the world's largest ad agency, firms Omnicom and Publicis plan to merge. This deal would be valued at $35 billion. - Republic Airways may also have found a buyer for Frontier Airlines (still in a preliminary, non-binding state) What does this mean for deal making in general? Many are pointing to these deals as a sign that equity values are not all that overpriced after all. As Richard Peterson of S&P Capital IQ states in the article, deal proceeds are up from last year. However, the proceeds figures had been skewed by some large transactions, while number of deals was down. If these large deals continue to happen, it may give confidence to the middle market to pursue more deals. Click here to read the entire article.

Capital Markets in 2025: What Will Change?

PricewaterhouseCoopers recently released a report on the state of capital markets in 2025.  The report expects a shift eastward, as would be expected by most market participants. This shift will increase the global horizon for many companies, and force them to look outside of their own country for growth opportunities, partners, acquisitions and even an exchange to list themselves on.  Almost three quarters of respondents said that emerging companies in particular will look to another emerging market for a listing.  Developed companies, the majority said, would prefer to list in another developed market. In terms of the might BRIC, only China has lived up to its billing so far.  80% of respondents thought that the Chinese market would be where the majority of listings occur by 2025.  For India and Brazil, 38% and 30% of respondents believe those markets will be important, respectively.  Russia is only thought to be an important market by about one in ten survey takers. This shift to emerging market exchanges will have wide implications for capital markets. Political, legal and regulatory uncertainty are all larger issues in a developing country.  Foreign investors will have to be opportunistic, but cautious when selecting investments in these new exchanges. Click here to read the report from PwC.

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.

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.

Inexperience in LBO Lending: A Dangerous Game

June 28, 2013 09:49 by Clayton Reeves in Financing, M&A  //  Tags:   //   Comments (0)
Mark Gaffin at the Gaffin Group offers some solid advice on the dangers of inexperience in LBO lending.  With the current deal drought, many lenders are trying to diversify their offerings and entering into a leveraged buyout market that can be dangerous for the inexperienced.  In the article he cleverly compares LBO lending to sailboat racing; the key similarity between these two items is that with experience comes a certain confidence and ability to manage the unexpected. Mark emphasizes the fact that executing deals takes a rare combination of experience, knowledge and patience from both lenders and other deal participants.  This is something not all firms, lenders or banks are equipped with.  Click below to read the rest of this article. Click here to read the full post.

Negotiating Loan Terms

April 19, 2013 09:47 by Bill Conway in Financing  //  Tags: ,   //   Comments (0)
Most of our recent posts have been about loan pricing and structure, which should come as no surprise to most of you. This is THE topic for banks right now, from rural community banks to the Wall Street megabanks. This means it is also the primary topic in our strategy discussions with clients. Our Flex Loan program is certainly helping clients book longer loans without the interest rate risk, but many are still facing hurdles on prepayment language and prices that translate to spreads under 200 basis points. I had this on my mind when I saw this post from Seth Godin's blog called "Avoiding the Custom Bully." [More]

Lower Equity Contributions Fueling M&A Activity

March 19, 2013 10:38 by Stephanie Siders in Financing, M&A, Private Equity  //  Tags:   //   Comments (0)
Equity contributions in private equity-backed deals are trending lower as private equity buyers increase leverage with cheap debt, enabling them to write checks for a lower percentage of the entire deal.  Equity contributions in leveraged buyouts averaged 39.4% in 2012, the lowest level seen since 2007.  The combination of cheap debt, lower equity contributions, and continued high levels of dry powder bodes well for increased M&A activity and deal size.   Read more here.

QE Cubed: A Modest Proposal for More Fed Buying. A Lot More.

March 8, 2013 12:57 by Terry Christenberry in Economy, Financing  //  Tags:   //   Comments (0)
Worried about the US budget deficit? David Kemper, Chairman of Commerce Bank sets forth an ingenious tongue in cheek solution, that is short but fun read. [More]

Can the Fed Ever Remove Stimulus?

February 22, 2013 11:37 by Clayton Reeves in Economy, Financing  //  Tags:   //   Comments (0)
An important topic for bankers, investors and citizens alike is the future active role of the Fed in the market place.  The actions of Bernanke & Co. have a material impact on what sort of lending and borrowing environment we operate within.  We've gone through several speeches and stages of quantitative easing (QE).  At first the question was, "When will QE stop?"  Then, it transitioned to, "Will QE ever stop?"  Finally, we are at the crossroads of "Can QE ever stop?" There is more to it than just hitting an on/off switch; the balance sheet of the Fed is now an albatross of securities that if sold could wreak havoc on other yield products.  AMG has done a great job of summarizing and discussing these issues.   Read more here.

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