In this Q1 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.
Highlights
Total M&A volume increased by 1.5%, from 393 transactions in Q1 2021 to 399 transactions in Q1 2022, largely driven by a 10.8% increase in the consumer discretionary industry, from 74 transactions in Q1 2021 to 82 transactions in Q1 2022
Total reported M&A value increased by 17.9%, from $3.6 billion in Q1 2021 to $4.3 billion in Q1 2022, mainly due to a substantial increase in the consumer discretionary industry, from $707.6 million in Q1 2021 to $1.4 billion in Q1 2022
Average reported transaction size increased by 55.3%, from $66.9 million in Q1 2021 to $103.9 million in Q1 2022, somewhat driven by ConvaTec Group’s $450.0 million acquisition of Triad Life Sciences
Average reported enterprise value (“EV”)-to-revenue multiples increased from 2.0x in Q1 2021 to 4.5x in Q1 2022
Average reported EV-to-earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples increased from 16.0x in Q1 2021 to 24.2x in Q1 2022
Q1 2021 vs. Q1 2022
Volume, Value and Average EV Multiples
M&A volume involving strategic buyers increased from 333 transactions in Q1 2021 to 336 transactions in Q1 2022 (0.9%), while M&A volume involving financial buyers increased from 39 transactions to 45 transactions (15.4%) over this same time period
Reported M&A value involving strategic buyers increased from $2.7 billion in Q1 2021 to $3.7 billion in Q1 2022 (38.2%), while M&A value involving financial buyers decreased from $857.8 million in Q1 2021 to $529.9 million in Q1 2022 (38.2%)
Average reported transaction size involving strategic buyers increased from $61.1 million in Q1 2021 to $109.2 million in Q1 2022 (78.9%), while average reported transaction size involving financial buyers decreased from $122.5 million in Q1 2021 to $106.0 million in Q1 2022 (13.5%)
Average reported EV-to-revenue multiples for transactions involving both strategic and financial buyers increased from 2.1x in Q1 2021 to 4.9x in Q1 2022 and from 1.5x to 2.8x over this same time period, respectively
Average reported EV-to-EBITDA multiples for transactions involving both strategic and financial buyers increased from 13.1x in Q1 2021 to 35.7x in Q1 2022 and from 6.8x to 12.7x over this same time period, respectively
Note: Average reported EV-to-revenue and EV-EBITDA multiples include one transaction involving financial buyers for Q1 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]
Successfully Transition Ownership by Knowing Your Options [here]
Robinhood's IPO Filings Highlight Risks Faced by Investors [here]
Better Together Spotlight: Valuation Services Assist E-Commerce Client with Acquisition of Plant-Based Products Company
Bennett Thrasher recently worked with an e-commerce client on its $18.4 million acquisition of a manufacturer and seller of plant-based cleaning/personal care products. The rationale for the deal included the strength of the target’s brand and its relationships with big-box retailers. Our team assisted the client in allocating the purchase price, including the valuation of contingent consideration and certain intangible assets, in connection with the acquisition for financial reporting purposes in accordance with FASB ASC 805, Business Combinations. The intangible assets valued as part of our analysis included non-compete agreements, customer relationships, trade names and technology. We also responded to questions posed by the client’s auditors, thereby streamlining the process and allowing the client to focus on other aspects of the audit. As a result of this analysis, the client was able to book the opening balance sheet appropriately and is now armed to properly account for the contingent consideration and intangible assets acquired on a go-forward basis. Furthermore, we now have a valuation model that we can leverage to assist this client with future acquisitions.
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 ourM&A Transaction Advisory Servicesleaders by calling 770.396.2200.
