Will’s letter from New York
Will Terkeltoub, an ansarada director in New York, shares his thoughts on what he has seen in the middle market deal space.
Many private equity groups are looking to exit their platform positions as the M&A market is at or nearing, what the market is saying, is a 5-year peak.
Trump’s administration induced a positive rally in the markets and deal making in the first quarter. But with recent blunders over policy change and foreign relations, some verticals may start to slow and take a ‘wait and see’ approach.
Many companies opted not to sell at the end of 2016. They wanted to wait until President Trump came into office due to the tax benefits they figured, will occur. ansarada found that many of its clients took advantage of our included 12-month staging period during this time.
Potential changes in NAFTA to ensue as the Trump administration looks to bring manufacturing companies back to the U.S., because of this, the consumer space is seeing several cross-border acquisitions into the U.S., allowing foreign companies to have manufacturing plants on American soil.
If you walk around the perimeter of a grocery store, the most trafficked area now, you can see the hottest food and beverage companies in the M&A space. Thanks Snapple.
Valuations are extremely inflated because PE groups have an abundance of dry powder and feel they can achieve a ROI in a shorter timeframe. The space is hot, with cloud and mobile transactions leading the trend. We saw a deal in the middle market last year that went for 7 times revenue!
The new hot companies that are being bought in this sector mainly work in AI. These companies could be as small as 3 or 5 person startups who are working out of their garage. I think we should all learn how to code 😉
Financial Services with an Insurance Focus
This is a very active space and is receiving higher than normal valuations. There has also been a good amount of cross-border transactions.
Some are worried about the potential changes to Obamacare, only because it may slow the pace of deals down until new legislation is passed. However, this should not ultimately affect the overall deal flow.
That’s it from me in our NYC office, I’d love to hear from you on the trends you’re seeing in the market or catch up for a coffee or drinks if you’re based in New York.
Happy deal making.
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