Advertisement CORPORATE GROWTH & M&A JANUARY 19-25, 2015 S-25 GLOBAL TRANSACTIONS GLOBAL M&A ACTIVITY RETURNING TO PRE-RECESSION LEVELS BY ANDREW K. PETRYK Globalization is a leading driver of M&A activity in what is rapidly becoming a borderless world. Buyers are aggressively pursuing international acquisitions to fasttrack entry to new geographies, stay close to customers, and gain better domestic market access in those regions. Renewed interest PETRYK is filtering down to the middle market, where niche companies that can bring technology and capability expansion to advance innovation are in high demand. Cross-border transaction volumes have reached levels not seen since before the financial crisis. Global middle market deal activity (defined as enterprise values between $25 million and $500 million, Capital IQ) in 2014 increased 14% over prior year levels in both deal volume and value. Leading industries included Financial Services (40% of deal volume), Consumer Products (15%), Industrials (9%), and IT (8%). The most active countries by target companies acquired included the United States (30% of deal volume), China (16%), and the United Kingdom (9%). Valuation multiples are rising with the median EBITDA multiple ticking up to 9.9x, the highest level since 2008. Foreign investors are setting sights on the United States, which remains attractive for acquisitions given its relative economic position, low energy costs, and reshoring movement, which are fueling a renaissance in the manufacturing sector: r The Institute for Supply Management projects higher growth for both the U.S. manufacturing and non-manufacturing sectors in 2015. r U.S. middle market companies have experienced a healthy rebound in the economic recovery and have proven their staying power, with revenue growth outperforming the broader market according to survey findings from the National Center for the Middle Market. Sixty-four percent of middle market companies (annual revenue between $10 million and $1 billion) expect revenue to increase in the next 12 months. r Higher levels of uncertainty in other global markets will also drive investment capital to the United States. We anticipate a healthy level of crossborder activity continuing into 2015. According to findings from a Baker & McKenzie survey released this June, more than a third of the 350 companies interviewed reported planning to pursue another cross-border deal in the next two years. Eighty-six percent of the respondents deemed their recent crossborder M&A transaction a success. Depending on specific company and industry dynamics, an international buyer may represent the best alternative to fully exploit the growth opportunities available to a middle market business. By enlisting a trusted advisor with the capabilities and resources to manage a global sale process, the end goal will be to maximize the value for your business. Andrew K. Petryk is Managing Director and Principal of Brown Gibbons Lang & Co. LLC (BGL) and member of Global M&A Partners (GMA), where he co-heads the Industrials practice. Contact him at apetryk@bglco.com or 216-241-2800. For more than 28 years, we’ve helped hundreds of business owners conceive, initiate, structure, and close M&A and nancing transactions. Call BCC for expert sell-side advisory, buy-side advisory, and valuation services. BRUML CAPITAL CORPORATION Investment Bankers for Entrepreneurs & the Middle Market 1801 East Ninth Street Suite 1620 Cleveland, OH 44114 Phone (216) 771- 6660 Fax (216) 771- 6673 Robert W. Bruml Andrew S. Gelfand James R. Deitzer Crain’s Cleveland Business Custom Publishing brumlcapital.com