M & A market hoping new year brings more activity than did dismal 2009
RICK ADAMCZAK
Daily Reporter Staff Writer
December 24, 2009
A local leader in the mergers and acquisitions field said he's "cautiously optimistic" about increased activity in the coming year after a moribund 2009.
"The recession for Wall Street is over, but then I talk to companies and they're still not hiring," said Emmet Apolinario, president of the Ohio Business Brokers Association.
During tough economic times businesses that are struggling may not be attractive because buyers want to acquire more successful companies.
"We do have a lot of buyers right now but there's a shortage of good businesses being taken to market," Apolinario said.
On the other hand, it's also a good time to go bargain hunting, he added, if the companies are stabilized.
"There are valid reasons for a sale. They don't have to be distressed," he said.
Many businesses hurt by the economy, however, are attempting to slug it out during the slow times with hopes of improvement not far away, Apolinario noted.
"I'm seeing a lot of distressed businesses hanging in there, hoping for a glimmer of hope," he said.
Other, more financially strong businesses are waiting to see if they can improve more and fetch a higher selling price, Apolinario said.
There some signs of life, however, especially among buyers.
"There is still some money in private equity, executives looking to buy, (but) some have been looking for a year. There's a shortage of good businesses to sell," he explained.
Many of those buyers are executives or Baby Boomers looking for a new career and or the independence that comes with being an owner.
"They've been in the corporate jobs for 20 years and they are finding opportunities in buying businesses," Apolinario said, adding they're often doing it not as a part-time or side gig, but as a full-time job.
As far as the types of businesses sought, health-care companies are in the strongest position, Apolinario said.
Also, handyman and repair businesses are doing well as consumers hang on to products longer rather than purchase new ones and perhaps need the old items maintained.
At the other end, the retail sector is abysmal.
"Businesses that have a footprint in the retail market have not done well, being affected of course by consumer spending," said Apolinario.
Restaurants, too, are "challenging," he said as consumers have cut their spending on dining out.
Any increase in activity would be an improvement on what's occurred this year in the deal-making business.
"It's been a tough year for mergers and acquisitions and business brokerage," said Apolinario. "The SBA stimulus package was a big help to get some deals done."
The federal stimulus package in the spring included a 90 percent federal guarantee of U.S. Small Business Administration loans by banks and lowered fees, which encouraged banks to provide more small business loans.
Still, it was such a rough year that Apolinario said he's seen some people leave the business brokerage field and that Ohio Business Brokers Association membership is down more than 20 percent this year.
Meanwhile, national mergers and acquisitions experts, too, are holding their breath that activity will improve next year.
"While it is likely that deal activity may not return to pre-crisis levels within the next few years, there is some cause for optimism when looking at the three drivers of deal activity: confidence, credit and cash," said Steve Krouskos, Americas markets leader for Ernst & Young LLP's transaction advisory services, in a recent statement.
For the second half of 2009, deal activity remains sluggish but is showing signs of modest acceleration, according to Ernst & Young.
The firm said deals continue to get done, but the types of deals completed, and the way these deals are financed and executed, has changed significantly.
"The new 'normal' is defined by continuing uncertainty, weaker demand and margin erosion, scarcity of capital and more risk-aversion in strategic decision making. Managing all aspects of the capital agenda is the best way to manage the new normal," said company officials.
"In this deal environment, the margins for error have narrowed," added Rich Jeanneret,Americas
RICK ADAMCZAK
Daily Reporter Staff Writer
December 24, 2009
A local leader in the mergers and acquisitions field said he's "cautiously optimistic" about increased activity in the coming year after a moribund 2009.
"The recession for Wall Street is over, but then I talk to companies and they're still not hiring," said Emmet Apolinario, president of the Ohio Business Brokers Association.
During tough economic times businesses that are struggling may not be attractive because buyers want to acquire more successful companies.
"We do have a lot of buyers right now but there's a shortage of good businesses being taken to market," Apolinario said.
On the other hand, it's also a good time to go bargain hunting, he added, if the companies are stabilized.
"There are valid reasons for a sale. They don't have to be distressed," he said.
Many businesses hurt by the economy, however, are attempting to slug it out during the slow times with hopes of improvement not far away, Apolinario noted.
"I'm seeing a lot of distressed businesses hanging in there, hoping for a glimmer of hope," he said.
Other, more financially strong businesses are waiting to see if they can improve more and fetch a higher selling price, Apolinario said.
There some signs of life, however, especially among buyers.
"There is still some money in private equity, executives looking to buy, (but) some have been looking for a year. There's a shortage of good businesses to sell," he explained.
Many of those buyers are executives or Baby Boomers looking for a new career and or the independence that comes with being an owner.
"They've been in the corporate jobs for 20 years and they are finding opportunities in buying businesses," Apolinario said, adding they're often doing it not as a part-time or side gig, but as a full-time job.
As far as the types of businesses sought, health-care companies are in the strongest position, Apolinario said.
Also, handyman and repair businesses are doing well as consumers hang on to products longer rather than purchase new ones and perhaps need the old items maintained.
At the other end, the retail sector is abysmal.
"Businesses that have a footprint in the retail market have not done well, being affected of course by consumer spending," said Apolinario.
Restaurants, too, are "challenging," he said as consumers have cut their spending on dining out.
Any increase in activity would be an improvement on what's occurred this year in the deal-making business.
"It's been a tough year for mergers and acquisitions and business brokerage," said Apolinario. "The SBA stimulus package was a big help to get some deals done."
The federal stimulus package in the spring included a 90 percent federal guarantee of U.S. Small Business Administration loans by banks and lowered fees, which encouraged banks to provide more small business loans.
Still, it was such a rough year that Apolinario said he's seen some people leave the business brokerage field and that Ohio Business Brokers Association membership is down more than 20 percent this year.
Meanwhile, national mergers and acquisitions experts, too, are holding their breath that activity will improve next year.
"While it is likely that deal activity may not return to pre-crisis levels within the next few years, there is some cause for optimism when looking at the three drivers of deal activity: confidence, credit and cash," said Steve Krouskos, Americas markets leader for Ernst & Young LLP's transaction advisory services, in a recent statement.
For the second half of 2009, deal activity remains sluggish but is showing signs of modest acceleration, according to Ernst & Young.
The firm said deals continue to get done, but the types of deals completed, and the way these deals are financed and executed, has changed significantly.
"The new 'normal' is defined by continuing uncertainty, weaker demand and margin erosion, scarcity of capital and more risk-aversion in strategic decision making. Managing all aspects of the capital agenda is the best way to manage the new normal," said company officials.
"In this deal environment, the margins for error have narrowed," added Rich Jeanneret,
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