erly plan the anticipated sale, so advisers
can perform a thorough analysis of every
relevant business aspect.
An Upbeat Beginning—
but Can It Last?
The LMM had a strong start in 2016, with
deal volume and deal value both up. Nearly
$12 billion was invested in deals in the first
quarter of this year, an increase of more
than 70 percent compared to the fourth
quarter of 2015. That was more capital invested than any quarter since the Q1 2008.
The number of deals during the first quarter of 2016 was 189, a 14 percent increase in
deal volume compared to the first quarter
of 2015. Traditional buyers and new entrants still show strong demand for quality
small-to-lower middle-market companies
($2 million to $10 million of EBITDA).
At InterGrowth, the pressing question
was whether 2016 LMM M&A will stay
strong in the face of global headwinds, a
presidential election and larger private
equity firms continuing to move down
market. While the first quarter of 2016 saw
record deals, all panelists agreed that market conditions were stabilizing in the midst
of the fourth year of a seller’s market. Although summertime deals typically define
the year, the story for 2016 is likely “more
of the same,” and the prevailing sentiment
about LMMs was optimistic. //
John Sanchez is the founder of the FPA
Group. He has more than 20 years of experience in communication skills training, accounting and finance.
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