In this Q4 2022 update, we provide data and highlights for Southeast (Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, South Carolina and Tennessee) middle-market (total transaction value < $USD 500mm) M&A transactions, including volume, value and enterprise value multiples. This update focuses on M&A trends in the energy, materials, industrials, consumer discretionary, consumer staples, health care, financials, information technology, communication services, utilities and real estate industries.
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Highlights
Total M&A volume decreased by 44.7%, from 584 transactions in Q4 2021 to 323 transactions in Q4 2022, largely driven by a 52.7% decrease in the industrials industry, from 169 transactions in Q4 2021 to 80 transactions in Q4 2022
Total reported M&A value decreased by 68.8%, from $12.4 billion in Q4 2021 to $3.9 billion in Q4 2022, mainly due to a substantial decrease in the consumer discretionary industry, from $2.7 billion in Q4 2021 to $575 million in Q4 2022
Average reported transaction size increased by 6.8%, from $103.2 million in Q4 2021 to $110.3 million in Q4 2022, partially driven by Davide Campari-Milano’s acquisition of Wilderness Trail Distillery for $420 million
Average reported enterprise value (“EV”)-to-revenue multiples increased from 1.9x in Q4 2021 to 3.7x in Q4 2022
Average reported EV-to-earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples increased from 8.3x in Q4 2021 to 9.5x in Q4 2022
Q4 2021 vs. Q4 2022
Volume, Value and Average EV Multiples
M&A volume involving both strategic and financial buyers decreased from Q4 2021 to Q4 2022, from 477 transactions to 259 transactions (45.7%) for strategic buyers and from 95 transactions to 51 transactions (46.3%) for financial buyers
Reported M&A value involving both strategic and financial buyers decreased from Q4 2021 to Q4 2022, from $9.7 billion to $3.6 billion (62.9%) for strategic buyers and from $2.4 billion to $398 million (83.4%) for financial buyers
Average reported transaction size involving strategic buyers increased from $102.5 million in Q4 2021 to $116.5 million in Q4 2022 (13.7%) and decreased from $120 million to $99 million (17.0%) for transactions involving financial buyers over this same time period
Average reported EV-to-revenue multiples for transactions involving strategic buyers increased from 2.0x in Q4 2021 to 3.7x in Q4 2022
Average reported EV-to-EBITDA multiples for transactions involving strategic buyers increased from 7.7x in Q4 2021 to 9.5x in Q4 2022
Source: Capital IQ
M&A Insights from Bennett Thrasher
M&A Insights: Immunizing Your Deal from COVID-19 Disputes [here]
M&A Insights: Recalibrating Your Approach to M&A as a Result of COVID-19 [here]
Using F Reorganization Strategically in Mergers & Acquisitions Transactions [here]
Make a Successful Ownership Transition by Knowing Your Options [here]
Robinhood’s IPO Filings Highlight a Number of Risks Faced by Investors [here]
Better Together Spotlight:
Valuation Services Assist Customer Engagement and Marketing Platform Client with Tax Planning Related to its Acquisition by a Financial Management and Compliance Products and Services Company
Bennett Thrasher recently assisted a customer engagement and marketing platform client with tax planning-related valuation services associated with its acquisition by a financial management and compliance products and services company. As part of our services, we assisted the client in the valuation of its equity on a per unit basis in connection with a transfer to a Net Income with Makeup Charitable Remainder Unitrust (NIMCRUT), the voting and non-voting units in three limited liability companies on a per unit basis in connection with a transfer and an analysis of the blockage discount applicable to the recipient of the buyer’s shares in connection with the sale of the company. As part of our analyses, we considered the discounted cash flow, guideline public company and guideline transaction methods, as well as the application of appropriate discounts for lack of control and marketability. Our analyses also included research concerning blockage discounts and public trading volumes in the buyer’s stock. As a result of our analyses, the client now has detailed valuation reports that it can provide to the IRS supporting the value of the units transferred.
Our M&A Advisory Services
For most business owners, a merger or acquisition is the most significant financial event of their lifetime. Buyers and sellers face many hurdles in reaching their goals of maximizing business value and minimizing risk. The experience of transaction advisors can be instrumental to achieving these goals.
Our team is comprised of dedicated advisors that can assist you across various stages of your transaction process, including:
Financial due diligence
Tax due diligence/structuring and valuation
Sell-side readiness
Exit planning
If you are embarking on a transaction opportunity, please contact one of our M&A Advisory Servicesleaders by calling 770.396.2200.
