S-4 JANUARY 19-25, 2015 CORPORATE GROWTH & M&A Advertisement TRENDS the first nine months of 2014 as compared to the first nine months of 2013. The U.S. M&A market has made Deal volume in the middle market an incredible run in 2014, with values also increased at 5.3%, and transacand volume not seen since 2007. tions multiples rose to 7.5X, nearly a According to Thomson 6% increase over 2013. Reuters, U.S. deal value There continues to be a through September 2014 strong climate for middle was $1.25 trillion and has market M&A from both increased nearly 65% over sellers (as multiples rise) the same period in 2013. and from buyers (as groups Absent the fourth quarter, aggressively seek quality 2014 deal value was already acquisitions). According 21% ahead of year-end 2013. to a recent survey of M&A FLEAGLE With nearly 7,000 deals anprofessionals by KPMG, nounced through September, 40% believe they will deal volume had surpassed the first acquire more than one company in nine months of 2013 by 5.5%. 2015 and 10% plan on acquiring Much of the visible growth can be 10-plus companies. attributed to large corporate deals; The positive trends that resonated nevertheless, the middle market from 2014 will remain in 2015 as low (<$500 million in revenues) has also cost of capital is readily available. achieved a similar growth trajectory in Because of the low cost of capital and 2014. According to Thomson Reuters, low interest rates, which should the middle market experienced a remain steady before they egress later 29.5% increase in deal value through in 2015, many corporate buyers, as Middle-market M&A momentum continues BY MARC A. FLEAGLE well as private equity groups, have lowered their expectations on ROIC or IRR, forcing multiples and values upward with increased equity in transactions. Acquisitive companies also continue to look for inorganic growth as cash sits on corporate balance sheets. According to S&P Capital IQ, 415 non-financial S&P 500 companies had over $1.3 trillion of cash on their balance sheets at the end of 2014. This, of course, does not include the tremendous amount of cash on other corporate balance sheets, or the significant amount of purchasing power available for private equity groups. According to Pitchbook, private equity purchasing power remains strong from post-recession fundraising, especially in 2013, and pre-recession overhang, as dry powder remains at approximately $500 billion with purchasing power over $1 trillion. The combined availability of capital for U.S. acquisitions continues to climb, and will be put to use in the near term within the middle market, as was evident in 2014. A Balancing Act: technology and client service insight that cannot be simulated by software. There are rafts of investment There is tremendous potential and financial choices. A relafor new technologies to enable tionship manager can synthecompanies to better serve clients. size these choices into At the highest level, meaningful solutions. technology can be levered Service providers should to anticipate client needs be expected to not only and infuse customized supply the requested data, advice and views into but also share knowledge personal data. For some, and perspectives a client an online interface may may not realize he or she become the preferred needs. A relationship propoint of contact. Applicafessional should proactively tions provide convenient OLEJKO anticipate concerns and ways for clients to access potential opportunities. their accounts alongside While many decisions can be information and advice regarding mathematically reduced to a their investments, finances, finite set of choices, there are record-keeping and administratimes when empathy and undertive concerns. standing are more important to The trend in financial services the success of an outcome than toward technology and away from logic alone. human contact, however, should be Perhaps, one day, a series of met with tremendous care. There algorithms will synthesize data, are limitations of technology in an anticipate needs and provide the environment where personalized right degree of empathy. Until service and advice are integral to then, financial service providers the success of the client and promust continue to hire and develop vider alike. the highest caliber professionals While machines increasingly in tandem with our commitment perform tasks previously believed to advance our technology. With to require human oversight, the all initiatives, the goal should be highly complex yet subtle difto ensure the delivery of unparalficulties of managing a family’s leled client service. present and multi-generational needs require discretion. The Linda M. Olejko, CFP® is a Managing relationship team who communiDirector of Glenmede. Please contact cates with a client in person, over her at 216-514-7876 or Linda.Olejko the phone or by email is capable of infusing valuable forethought and @glenmede.com. BY LINDA M. OLEJKO Marc A. Fleagle is Vice President of MelCap Partners LLC. Contact him at marc@melcap.co. Disclaimer We are proud to join ACG in recognizing our clients Blue Point Capital Partners Hyland Software and the other 2014 Deal Maker Award Finalists. We are honored to have been legal counsel to Hyland Software in its acquisition of AnyDoc Software and to Blue Point Capital Partners in its acquisition of Hilsinger Co. and its divestiture of JTM Foods. We have proudly been representing publicly held and private companies in complex M&A matters for nearly 100 years. The articles in this section were prepared by the respective contributors for general information purposes only and are not intended as legal, tax, accounting or financial advice. Under no circumstances should any information contained in any of these articles be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon any such information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed in the articles are those of the respective contributor and are subject to change without notice due to market conditions and other factors. bakerlaw.com © 2014 Crain’s Cleveland Business Custom Publishing