RICK ADAMCZAK | Daily Reporter
Published: 12/01/2010
Following a couple of moribund years it looks like there's growing activity among buyers and sellers of companies. "In the last quarter it's come back like a banshee," said Emmet Apolinario, president of the Ohio Business Brokers Association.
That's certainly welcome news for an industry battered by the recession that started in 2007 when many investors lost money and had none left over to buy companies. Those who did have cash or credit remained quiet, wary of the economy's future.
Apolinario, in fact, said membership at the Ohio Business Brokers Association has plummeted more than 40 percent since the start of the recession.
But the mergers and acquisitions landscape has brightened in recent months as worries about the economy have calmed.
"(Next year) is looking pretty bright," said Apolinario. "It will be an improvement from 2010. Investors are coming out of the woodwork who we've never heard from before, who had their money on the sidelines."
He attributed the boost in activity, at least in some part, to the passage by Congress of the Small Business Jobs and Credit Act of 2010.
Signed into law by President Barack Obama in September, part of that law includes enhanced U.S. Small Business Administration loans that are 90 percent guaranteed by the federal government. The law gave the SBA $14 billion in additional funding for banks to loan to small business owners.
In the first week of the Jobs Act, the SBA has stated it provided nearly 2,000 loans totaling nearly $1 billion in lending support.
"The dealmakers are really taking advantage of this, especially the smaller ones since it's for (loans) of $5 million or less of value," said Apolinario. "We were cued up for it, so when it hit things were busy."
The SBA loan provisions, however, expire Dec. 31 and money available for the program could even dry up before then, he said.
The outlook for 2011 will depend somewhat on whether those loan provisions are extended beyond Dec. 31, said Apolinario.
"It depends on what the fed does. We're hoping it's renewed," he said. "If it's not renewed lending will still happen, deals will still happen, but not at the hectic pace we've seen."
He said there's a "perfect storm" that's making smaller deals very popular, with some unemployed workers or Baby Boomers who are looking to buy small businesses.
Existing and established franchises are popular targets for investors, especially those in the service industry, but not so much in the food sector. Environmentally friendly industries and technology companies should also see an increase in mergers and acquisitions activity in the coming months, Apolinario said.
Meanwhile, larger deals are happening, most notably at the local level.
Dublin-based Cardinal Health's announcement Monday that it's acquiring Chinese pharmaceuticals distributor Zuellig Pharma for $470 million. Earlier in November Cardinal Health announced it had agreed to buy Kinray Inc., a pharmaceuticals distributor based in New York, for $1.3 billion.
"They're coming into 2011 with an appetite for bigger companies," said Apolinario. "We're going to see growth among the (larger acquisitions) because there's a lot of pent-up energy."
Several national and even global predictions confirm Apolinario's assessment that mergers and acquisitions activity is picking up.
According to a survey conducted by Thomson Reuters and Freeman Consulting Services, the 150 people polled expect deals to rise by 36 percent worldwide to $3.04 trillion in 2011, the highest figure since the $4.28 trillion recorded before the credit crunch and banking crisis started in 2007.
The Ohio Business Brokers Association is a non-profit corporation founded in 1987. The group helps align prospective business buyer with businesses that are for sale.
Copyright © 2010 The Daily Reporter - All Rights Reserved
View the article on the Daily Reporter website HERE.
About Me
- Emmet Apolinario
- After growing a regional technology services company to a multi-million dollar operation, it came time for me to consider an exit and sale from the business to allow the company to grow to its next level. I envisioned that through either a strategic acquisition or through bringing in a new CEO that has a deeper and wider relationships in the software services arena that a more robust growth will take place. This process eventually led me to comprehensively understand what goes on inside the exit and sale of a business. Having been on the other side as well of buying other businesses, my blog will reflect actual real life transactions and events that pertain to the complex and complicated process of buying and selling small businesses.
Showing posts with label mergers and acquisition activity. Show all posts
Showing posts with label mergers and acquisition activity. Show all posts
Tuesday, December 14, 2010
Tuesday, November 30, 2010
Year 2010 M & A Market Hoping New Year Brings More Activity Than Did Dismal 2009
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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