GF Data’s first quarter analysis confirms what private equity buyers and financial professionals have sensed since the beginning of the year – that the explosion in transaction activity heading into the end of 2012 carried no momentum into 2013.
The 183 private equity firms that are active contributors to GF Data reported 92 transactions closed in the fourth quarter of 2012. The same universe reported 14 deals completed in the first quarter. The GF Data universe encompasses transactions with total enterprise values in the $10 million to $250 million range.
“We’re sorry to confirm the anecdotal impression of business buyers and other deal professionals,” said GF Data CEO Andrew Greenberg. “Notwithstanding fundamentally good economic, corporate and capital market conditions, there were very few transactions in process once the deluge of deals aiming to close by year end worked their way through the system.”
Overall multiples for the first quarter were 5.9x TTM Adjusted EBITDA, essentially in line with the 6.0x mark seen in the fourth quarter but well off the 6.8x mark in the third quarter.
GF Data’s principals noted, however, that a closer reading of the data suggests aggregate multiples are not in decline. According to B. Graeme Frazier, GF Data Co-Founder and Principal, the end-of-2012 groundswell appears to have been driven by individual or family sellers, presumably motivated at least in part by concerns about federal tax rates. “Non-institutional sellers drove a disproportionate share of the volume in Q4, and we saw the drop in aggregate pricing,” said Mr. Frazier. “This trend continued in the first quarter. It seems clear that pricing is at worst holding steady once these calendar-driven sellers come out of the mix.”
“Although M&A volume was practically shut off in the first quarter, we are anticipating the year to be back end-loaded with deal activity,” commented Dan Shea, Managing Director at BDO Capital Advisors. “Lenders are actively supporting M&A transactions and we are starting to see nice momentum as a result of three years of improving corporate performance since the Great Recession. We believe valuations are likely to rise along with volume over the next several quarters.”
GF Data Resources provides data on private equity sponsored M&A transactions with enterprise values of $10 million to $250 million, offering private equity firms and other users external information to use in valuing and assessing M&A transactions. GF Data collects transaction information from private equity groups on a blind and confidential basis. Data contributors and paid subscribers receive two products ‐‐ high‐level valuation and leverage data via electronically delivered quarterly reports, and continuous access through the firm’s web site to detailed valuation data organized by NAICS industry code. GF Data is based in West Conshohocken, PA.
For information on subscribing to GF Data or to contribute data as a private equity participant, contact Bob Wegbreit at bw@gfdataresources.com or visit the firm’s website at www.gfdataresources.com.
© 2013 PEPD • Private Equity’s Leading News Magazine • 5-21-13
