More Than A Whimper, Less Than A Bang
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More Than A Whimper, Less Than A Bang

gfdata nfWhatever the sound is in between a bang and a whimper is the sound that most aptly describes middle market deal activity at year-end 2013, according to GF Data’s February M&A Report.

The 187 private equity firms that are active contributors to GF Data reported 56 completed transactions in the $10 million to $250 million value range in the fourth quarter of 2013, well below the 101 deals closed in 2012’s tax-driven year-end rush. However, this represents a steady pick-up in deals actually being completed over the course of last year.

Valuations averaged 6.7x Trailing Twelve Months (TTM) Adjusted EBITDA for the quarter, the highest mark since 3Q 2012.

Andy Greenberg nf2“We believe the firming up in valuations reflects a combination of trends,” said Andrew Greenberg, GF Data’s CEO, “A bounce back off of the “false bottom” created by deal dynamics surrounding the 2012 year-end; the continued scarcity of outstanding properties being offered for sale; and the hostility of smaller business sellers to post-LOI price concessions – they either close near the original price or their deal doesn’t happen. “

With its year-end edition, GF Data also introduced a new Leverage Report offering a more intensive view of debt and capital structure trends, specific to the lower middle market.

Frazier nf2“Debt multiples for total and senior debt remained in the low fours and low threes respectively,” said Graeme Frazier, IV, GF Data Principal and Co-Founder. “While the average total debt multiple actually dropped in the fourth quarter, the more detailed data we now publish enables subscribers to drill in and see that this is a result of deal mix rather than evidence of a secular trend.”

“GF Data’s Leverage Report confirms senior lenders are responding to the private equity market with extremely competitive debt pricing and fees. Good capital structures and quality management allows us to manage risk, which is reflected in the capital pricing,” said Joseph Finley, President, TriState Capital Bank.

GF Data provides reliable external information for use in valuing and assessing M&A transactions to private equity firms, investors, lenders and other users. GF Data collects and publishes proprietary transaction information from private equity groups on a blind and confidential basis. Two hundred and nineteen private equity firms have provided information on deals included in the latest report. Data contributors and paid subscribers receive four products: (1) a quarterly report containing high-level valuation, volume and leverage data; (2) a quarterly supplement offering detailed information on debt and capital structure trends; (3) a semi-annual supplement o indemnification cap, escrow and other details; and (4) continuous access, through GF Data’s secure website, to detailed valuation data organized by NAICS code.

For information on subscribing or on contributing data as a private equity participant, please contact Bob Wegbreit at bw@gfdataresources.com or 610-260-6263.

© 2014 PEPD • Private Equity’s Leading News Magazine • 2-12-14

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