From The Transition Companies Denver & Gene Sartin
Private Strategic Mergers and Acquisitions Activity Increases
The Transition Companies and CEO Gene Sartin, report that mergers and acquisitions activity on the part of private strategic acquirers is at an all time high. Acquirers of middle-market companies usually consist of public companies, private companies, Private Equity Groups and foreign buyers. Certain economic, lending and currency metrics typically drive how active each of these types of buyers are acquiring in any given market.
Since the year 2000 notes Gene Sartin, private buyers of middle-market companies have averaged 32 percent of closed transactions with public companies accounting for an average of 39 percent, Private Equity Groups have averaged 15 percent and foreign buyers 14 percent of closed transactions. In the last 3 months LTM backward from September 30, 2010 private buyers have accounted for 44.7 percent of closed transactions with public buyers at 27.6 percent, Private Equity Groups at 11.1 percent and foreign buyers at 16.5 percent. These trends signal a shift in the zeitgeist of the buying community as it mediates the influences of the capital markets and the demands of shareholders in order to grow effectively in the competitive contemporary marketplace.
The trends demonstrated by overall Mergers and Acquisitions industry research regarding types of acquirers is re-enforced with internal data from the transaction roster of The Transition Companies. Gene Sartin points out that in the last 6 months of 2010, the spread of closed transactions and those under Letter of Intent and in the closing phase show that 55 percent of acquirers of The Transition Companies clients are private strategic acquirers. Furthermore, Private Equity Groups with platform Companies in any one industry that subsequently act like private strategic acquirers represent 23 percent of acquirers in The Transition Companies transaction roster versus 11 percent for Private Equity Groups acquiring standalone portfolio companies.
According to Gene Sartin, many privately-held companies have come to the realization the only way to grow in this economy is through acquisition. Organic growth is simply too difficult in these economic conditions forcing growth through acquisition.