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Project XYZ Recent Trends in Middle Market M&A March 7, 2008 Barry E. Steiner Project XYZ Recent Trends in Middle Market M&A March 7, 2008 Barry E. Steiner Managing Director Member: NYSE, AMEX, FINRA, SIPC Capital Raising | Mergers & Acquisitions | Fairness & Solvency Opinions | Valuations | Restructuring | Financial Advisory MIAMI • NEW YORK • HOUSTON • COLUMBUS • MELVILLE • BOCA RATON • CHICAGO • PRINCETON • PALO ALTO • LOS ANGELES

Project XYZ Factors Driving M&A Market Activity Investor Confidence Economic Environment Stock Market Performance Project XYZ Factors Driving M&A Market Activity Investor Confidence Economic Environment Stock Market Performance CEO Confidence Credit Markets M&A ACTIVITY Shareholder Activism Corporate Scandals Valuation Political Landscape Geopolitical Situation 2

U. S. M&A Activity Continued to Increase During 2007 Project XYZ • Since mid-2003, U. S. M&A Activity Continued to Increase During 2007 Project XYZ • Since mid-2003, favorable economic and market conditions have created a near perfect M&A deal environment. • The rapid pace of M&A activity in the first half of 2007 was followed by a dramatic slowdown during the second half of the year. • Despite the dramatic slowdown directly resulting from the credit market crisis, the M&A market maintained its fifth consecutive year of growth in 2007. (# of Deals) (Deal Value - $Bn) (1) Middle-Market defined as transactions with a deal value under $1 bn. This definition is consistent throughout the presentation. Sources of Information: Thomson Financial. 3

2007 M&A Trends Project XYZ • The strongest segment of the U. S. M&A 2007 M&A Trends Project XYZ • The strongest segment of the U. S. M&A market during 2007 was in billion-dollar-plus transactions. • U. S. M&A activity represented nearly 35% of all global M&A transactions in 2007 and over 40% of the total dollar volume for the year. • Divestitures were a major source of M&A deal volume in 2007, accounting for approximately 40% of all middle-market transactions. • Private equity continued to play a significant role in the M&A markets. • The median EBITDA multiple for M&A transactions in 2007 was 11. 4 x. • Key elements which presented favorable environment have changed. 4

2007 M&A Trends (continued) Project XYZ • Most of the key market drivers have 2007 M&A Trends (continued) Project XYZ • Most of the key market drivers have become uncertain or turned negative creating an uncertain M&A environment for 2008. Sources of Information: Thomson Financial. 5

M&A Activity by Industry Project XYZ • Technology is the most active sector, representing M&A Activity by Industry Project XYZ • Technology is the most active sector, representing 19% of all announced M&A transactions in 2007. The following chart details total U. S. M&A activity in 2007 by number of announced transactions. Sources of Information: Thomson Financial. 6

M&A Payment Methods Project XYZ • The following chart details U. S. middle-market M&A M&A Payment Methods Project XYZ • The following chart details U. S. middle-market M&A payment methods during the last ten years. During 2007, over 65% of all U. S. middle-market transactions were completed with an all cash consideration. Note: Data is based on number of U. S. middle-market M&A deals. Sources of Information: Thomson Financial. 7

Corporate M&A Activity Project XYZ • Corporate M&A activity accounted for over 87% of Corporate M&A Activity Project XYZ • Corporate M&A activity accounted for over 87% of all U. S. M&A transactions in 2007 and is expected to increase in 2008. • The number of deals involving a corporate acquiror increased for the fifth straight year in 2007. • The following chart outlines all corporate M&A activity in the U. S. during the last ten years. (# of Deals) Sources of Information: Thomson Financial. 8

Private Equity Fundraising Activity Project XYZ • 2007 was a record year for private Private Equity Fundraising Activity Project XYZ • 2007 was a record year for private equity fundraising activity. • Increased availability of capital, as well as declining valuations and a need to make add-on acquisitions to existing portfolio companies should drive private equity buy-side activity in 2008. • The following chart shows funds raised by private equity firms during the last ten years. ($Bn) Sources of Information: Dow Jones Private Equity Analyst. 9

Project XYZ U. S. Private Equity Activity • 2007 experienced 12% growth from 2006 Project XYZ U. S. Private Equity Activity • 2007 experienced 12% growth from 2006 in deal flow for private equity backed U. S. acquisitions. • Private equity firms continue to focus on private company acquisition targets – 59% of all private equity backed acquisitions in 2007. • The following chart outlines historical U. S. private equity buy-side activity from 1998 through 2007. (# of Deals) Sources of Information: Thomson Financial. (Deal Value - $Bn) 10

Middle-Market Valuation Project XYZ • The combination of strong demand favorable financing conditions have Middle-Market Valuation Project XYZ • The combination of strong demand favorable financing conditions have kept valuations at the upper end of their historical ranges. • The following chart details median U. S. middle-market enterprise value to EBITDA multiples during the last ten years. (EV/EBITDA Multiple) Sources of Information: Thomson Financial. 11

Aggregate M&A Market Valuation Project XYZ • The following chart details average enterprise value Aggregate M&A Market Valuation Project XYZ • The following chart details average enterprise value to EBITDA multiples across different sectors for all U. S. M&A activity during the last ten years. (EV/EBITDA Multiple) Sources of Information: Thomson Financial. 12

Overview of Financing Environment Project XYZ • One of the primary factors driving the Overview of Financing Environment Project XYZ • One of the primary factors driving the M&A boom of the last five years has been the substantial amount of liquidity available to finance acquisitions. • High equity prices and low interest rates, coupled with a friendly financing environment, led to creating very high demand for financing and to continuously increasing acceptable levels of debt to EBITDA. • The availability of friendly financing helped to drive up valuations by allowing private equity firms to compete and bid against strategic buyers. • The chart below lays out average debt multiples in middle-market M&A transactions during the last ten years for deals below and above $50 mm in EBITDA. (Debt/EBITDA Multiple) Sources of Information: Standard & Poor’s Leveraged Commentary & Data. 13

2008 and Beyond Project XYZ • Capital that moved to the sidelines as valuations 2008 and Beyond Project XYZ • Capital that moved to the sidelines as valuations got pricier, is now poised to return. • More realistic debt pricing, leverage ratios and return expectations. • Good companies will continue to be high in demand. • New M&A announcements in the first month of 2008 rose just 3% from the previous month, but aggregate M&A spending dropped 17%. • It is likely that M&A will slow in the short-term as buyers, sellers and sources of capital adjust to some of the changing elements in the financial landscape. 14

Project XYZ Ladenburg Thalmann & Co. Inc. Miami, FL 4400 Biscayne Blvd 14 th Project XYZ Ladenburg Thalmann & Co. Inc. Miami, FL 4400 Biscayne Blvd 14 th Floor Miami, FL 33137 Tel: 305. 572. 4200 New York, NY 153 East 53 rd Street 49 th Floor New York, NY 10022 Tel: 212. 409. 2000 Additional offices in Melville, NY, Columbus, OH, Houston, TX, Princeton, NJ, Los Angeles, CA, Boca Raton, FL, and Lincolnshire, IL Member New York Stock Exchange 15