Record October for M&A Deals 

Reflects Current Market Conditions

The US M&A market is on a roll, which is good news for both sellers and buyers in the middle market.  

A series of high-profile deals announced in October makes it the biggest month ever for M&A transactions and even surpassed the epic deal making surge in January 2000. Mega deals are driving activity and are almost too numerous to count, e.g., the oil-and-gas business combination of General Electric and Baker Hughes, the telecom tie-up of Century Link and Level 3, and AT&T’s acquisition of Time Warner, etc.

Another good example in the global semiconductor sector is Qualcomm’s US$47 Billion acquisition of NXP Semiconductors, which notched the biggest semiconductor targeted M&A deal on record globally.

Top 5 Global Tech Targeted M&A Deals on Record

So far this year, US$1.6 Trillion of M&A transactions has been announced in the domestic market.  It reflects easy financing conditions, more confidence in the economic and business outlook, and keen foresight on the part of management teams.

The current economic environment of low interest rates and high stock prices have encouraged deal making.  Cheap borrowing costs makes it easy to finance deals, while high stock prices provide companies with higher valuations.  

With unprecedented economic conditions, owners of middle market businesses, in particular, have a continued incentive to start or keep doing deals.

Versailles Group is a 30-year-old Boston-based investment bank that specializes in international mergers, acquisitions, and divestitures.  Versailles Group’s skill, flexibility, and experience have enabled it to successfully close M&A transactions for companies with revenues greater than US$2 million.  Versailles Group has closed transactions in all economic environments, literally around the world.

Versailles Group provides clients with both buy-side and sell-side M&A services, and has been completing cross-border transactions since its founding in 1987.  

More information on Versailles Group, Ltd. can be found at www.versaillesgroup.com.

For additional information, please contact

Donald Grava

Founder and President

+617-449-3325

November 15, 2016

Global M&A Rebounds With Newfound   Attractiveness in Europe

With mega deals leading the market, the global M&A market showed signals of rebounding in Q3.  Compared to US$1.0 trillion in Q1 and US$1.1 trillion in Q2, the value of global M&A increased to US$1.2 trillion in Q3, marking the second consecutive quarterly improvement.  In all there were 19,416 transactions announced during Q3 and 11 transactions valued at more than US$10 billion each.

Regarding deal value, the US led the market, followed by UK, China, Canada and India.  US companies remain top attractions for global investors as US$416 billion of deals were completed with US targets in Q3.  These US transactions accounted for 40% of the global market and were more than double the deal value of either the UK or China.  

The chart below shows the top five global target countries by deal value.

In terms of volume, most of the M&A deals were concentrated in US, followed by China, UK, Canada and Germany, continuing the trend for the first half of 2016. 

It is worth noting that M&A activities in Germany have remained resilient in the face of slower growth and tremendous volatility in the global market, with both the volume and value of transactions remaining close to the 2015 peak level.  What made Germany stand out in the global M&A market rankings is the giant US$132 billion deal between SABMiller and AB InBev, which is the largest deal by value in Q3 worldwide.

Interestingly, the ever-increasing deal value in UK is bucking the trend in global M&A market.  Since the Brexit vote, there have been rumors that the level of mergers and acquisitions activities across Europe would be threatened; however, the positive M&A data in Q3 2016 signaled newfound attractiveness of European M&A.

Versailles Group is a 30-year-old Boston-based investment bank that specializes in international mergers, acquisitions, and divestitures.  Versailles Group’s skill, flexibility, and experience have enabled it to successfully close M&A transactions for companies with revenues greater than US$2 million.  Versailles Group has closed transactions in all economic environments, literally around the world.

Versailles Group provides clients with both buy-side and sell-side M&A services, and has been completing cross-border transactions since its founding in 1987.  

More information on Versailles Group, Ltd. can be found at www.versaillesgroup.com.

For additional information, please contact

Donald Grava

Founder and President

+617-449-3325

November 1, 2016

The importance of M&A As a Tool to Adapt to Changing Business Environments

To succeed in the current business environment companies will need to develop a keen sense of agility to grapple with the slow and uncertain economy, political risks, the threat from new entrants with more creative and efficient business models, etc.  It is widely recognized by CEOs that to respond to today’s marketplace organic growth is far from enough because most transformational technologies are outside the core competency of the average organization.  According to KPMG, CEOs are pursuing a range of activities in search of growth, which are listed below.  For each activity, the percentage indicates what percentage of CEOs will think about that particular action.

M&A, including minority investments, is expected to play a major role as companies search for new and valuable business solutions. Companies that are able to be proactive in terms of technological and business model disruptions will greatly enhance their chances of success, profitability, and longevity.  With regard to the US presidential election, and as Warren Buffet said, the market will move forward with either candidate who happens to get elected as President.  The country will survive and business will survive.  Succinctly, M&A will go on regardless of political uncertainty.

Versailles Group is a 30-year-old Boston-based investment bank that specializes in international mergers, acquisitions, and divestitures.  Versailles Group’s skill, flexibility, and experience have enabled it to successfully close M&A transactions for companies with revenues between US$2 million and US$250 million.  Versailles Group has closed transactions in all economic environments, literally around the world.

Versailles Group provides clients with both buy-side and sell-side M&A services, and has been completing cross-border transactions since its founding in 1987.  

More information on Versailles Group, Ltd. can be found at www.versaillesgroup.com.

For additional information, please contact

Donald Grava

Founder and President

+617-449-3325

October 4, 2016

Transportation and Logistics

High Growth Sector for M&A

The transportation and logistics (“T&L”) sector is experiencing substantial growth in global M&A activity.  This sector had a strong Q1 2016, and activity increased in Q2.  By volume, the number of deals in Q2 was 6% greater than Q1.  The average deal value was also high during Q2 at almost US$670 million, and compared to Q1, was 20% higher.  Over the past few years, deal value for this sector has been steadily increasing. The average deal value in 2016 is 25% higher than the average for the past three years.

A major factor in the consistent increase in T&L activity is the current high level of M&A activity in Asia, in general, an in China, in particular.  Asia has been a leader in this sector for deals over the past few years.  As seen in the charts below, for the first half of 2016, Asia maintained a strong lead over other regions, in both deal value and volume, accounting for more than 50% of both measures.  Additionally, in terms of both volume and value, financial buyers lag far behind strategic buyers in completing T&L mergers and acquisitions.  Many of the companies within the T&L sector are looking to diversify across sub-sectors, which has also caused an increase in M&A demand from industry buyers.

During the first half of 2016, there were five mega deals completed in transportation and logistics, which totaled US$26.7 billion.  The largest deal within the T&L sector was in the trucking sub-sector.  Deal value in trucking increased 69% in Q2 2016, as compared to the same quarter in the previous year.  In Q2 2016, Logistics was the second largest sub-sector, followed by shipping, with deal values of US$5.8 billion and US$923 million, respectively.  Overall, the largest transaction during the first half of 2016 was Maanshan Dingtai Rare Earth & New Materials Co.’s acquisition of SF Holding Co. for US$16.8 billion.

Worldwide, mergers and acquisitions in the transportation and logistics sector is expected to continue growing.  Corporations are currently seeking to outsource logistics that are heavily based in advanced technology.  The expansion of world trade and e-commerce will continue to drive this demand.  All in all, global M&A activity in the transportation and logistics sector should remain strong for at least the next five years and many are confident the activity will continue to grow across all sub-sectors.  T&L merger and acquisitions activity in the US is also expected to increase.

Versailles Group is a 30-year-old Boston-based investment bank that specializes in international mergers, acquisitions, and divestitures.  Versailles Group’s skill, flexibility, and experience have enabled it to successfully close M&A transactions for companies with revenues between US$2 million and US$250 million.  Versailles Group has closed transactions in all economic environments, literally around the world.

Versailles Group provides clients with both buy-side and sell-side M&A services, and has been completing cross-border transactions since its founding in 1987.  

More information on Versailles Group, Ltd. can be found at www.versaillesgroup.com.

For additional information, please contact

Donald Grava

Founder and President

+617-449-3325

September 23, 2016

China becomes the largest investor in Brazil

As one of the BRIC countries, Brazil was projected to continue to be one of the fastest growing economies in the world.  However, the 2015 recession in Brazil resulted in a negative growth rate of 3.8%.  As a result, Brazil slid from seventh to ninth place in the world economies ranking. 

Year-to-date, Chinese companies have already purchased US$4 billion of assets in Brazil, the highest level since 2010.   According to Bloomberg, the top five countries investing in Brazil are China - 1^st, US – 2nd, Norway – 3rd, Mexico 4th, UK – 5^th.

The Brazilian currency, the Real, has depreciated more than 50%, which has enhanced Chinese and US purchasing power in terms of investment.  It’s also important to note that as compared to the US, China has experienced less political resistance when acquiring Brazilian assets.

Some notable transactions where Chinese companies made acquisitions in Brazil: 

China Investment Corp., which has a US$814 billion sovereign fund, is leading a Chinese investor group that is in talks to complete a multibillion-dollar iron-ore streaming deal with Brazil’s Vale SA.  The consortium is negotiating the potential purchase of a portion of Vale’s future iron-ore output for as long as 30 years.  Vale could fetch about US$9 billion upfront from the sale.

State Grid Corp of China, the world’s largest electricity provider by revenue, is wooing shareholders of Brazil’s CPFL Energia SA and a listed subsidiary.  It expects to secure stakes from large shareholders before making an offer for the entire company.

The Fosun Group, a major China-based investment group, with operations in several countries, signed an agreement to acquire Rio Bravo Investimentos.

Shanghai Pengxin Group Co. purchased control of Brazilian grains trader Fiagril.  People familiar with the deal said the value of the deal could be around 1 billion Reais (US$290 million).  Shanghai Pengzin, like most foreign buyers would keep current management in place. 

Versailles Group is a 30-year-old Boston-based investment bank that specializes in international mergers, acquisitions, and divestitures.  Versailles Group’s skill, flexibility, and experience have enabled it to successfully close M&A transactions for companies with revenues between US$2 million and US$250 million.  Versailles Group has closed transactions in all economic environments, literally around the world.

Versailles Group provides clients with both buy-side and sell-side M&A services, and has been completing cross-border transactions since its founding in 1987.  

More information on Versailles Group, Ltd. can be found at www.versaillesgroup.com.

For additional information, please contact

Donald Grava

Founder and President

+617-449-3325

September 19, 2016

M&A Activity in Western Europe

First Half of 2016

While the US and China receive the most media attention for M&A activity, Western Europe should not be overlooked.  The charts below reflect the deal volume and value breakdowns for the Western European countries.

In terms of the number of deals completed in Western Europe, the two countries that have seen the highest activity are the United Kingdom and Germany.  On a global level, these countries also rank well, and are usually within the top five countries for highest deal volume.  The UK significantly outpaced German deals in the first half of 2016, closing almost 50% more transactions.  It should be noted that Germany is completing significantly more deals in 2016 than they did in 2015.  The chart below reflects the top five Western European countries with the greatest deal volume.

By deal value, the UK is still the leader in Western Europe for the first half of 2016 with their transactions totaling US$119,342MM.  Surprisingly, despite its high volume of deals, Germany does not hold second place for deal value, but rather drops down to fourth.  Switzerland has more than doubled its deal value as compared to the same time period in 2015, and holds second place in Western Europe.  For the first half of 2016 Switzerland completed US$66,276MM in deals, as compared to the same period in 2015 when they had completed US$31,663MM.  Shown in the chart below are the leading Western European countries with the highest deal value.

Post Brexit many have their eye on Western European M&A deals.  It is expected that as the British Pound fluctuates against other currencies, so will the number of transactions between countries.  While Brexit may help firms in the United States expand abroad at a reasonable price, overall deal activity within the UK is uncertain for the second half of 2016.  Many believe the deal volume will fall, however some economists are optimistic about deal flow and predict it to pick up during the remainder of the year.

Versailles Group is a 30-year-old Boston-based investment bank that specializes in international mergers, acquisitions, and divestitures.  Versailles Group’s skill, flexibility, and experience have enabled it to successfully close M&A transactions for companies with revenues between US$2 million and US$250 million.  Versailles Group has closed transactions in all economic environments, literally around the world.

Versailles Group provides clients with both buy-side and sell-side M&A services, and has been completing cross-border transactions since its founding in 1987.  

More information on Versailles Group, Ltd. can be found at www.versaillesgroup.com.

For additional information, please contact

Donald Grava

Founder and President

+617-449-3325

September 15, 2016

China - M&A Lending

China recently made changes to its government policies, encouraging Chinese companies to expand abroad.  Domestic banks are adapting to the policy changes by prioritizing M&A lending.  As a result, companies are able to easily obtain loans for acquisitions.  For example, China CITIC Bank International made a US$12.7 billion loan in June allowing China National Chemical Corp. to purchase Syngenta AG.  Many similar deals have recently been completed thanks to readily available financing. 

Previously, only top tier Chinese banks would engage in cross-border M&A; however, second tier banks are now aggressively lending.  As banks work hard to increase deal volume, Chinese banks are expected to improve their ranking for financing M&A transactions.  Bank of China is currently ranked 20th in global M&A lending.  In order to facilitate M&A transactions, Chinese banks are starting to establish overseas branches which will make the M&A process more convenient for its clients.  These banks are more capable than ever to move quickly in cross boarder deals and Chinese companies that are backed by state lenders have been extremely active in closing cross boarder deals.

While policy changes have made a positive impact, they are not the only factor driving Chinese cross-border M&A.  Investment opportunities in China are becoming harder to find.  The country’s economic expansion is slowing and domestic companies are looking abroad to diversify and meet growth objectives.  Large companies in particular have found limited opportunities for acquisitions within China.  Additionally, by making foreign acquisitions, companies have been able to expand trade and move into new markets.  Most companies in the market for acquisitions are searching for well-known brands and advanced technology.

Versailles Group is a 30-year-old Boston-based investment bank that specializes in international mergers, acquisitions, and divestitures.  Versailles Group’s skill, flexibility, and experience have enabled it to successfully close M&A transactions for companies with revenues between US$2 million and US$250 million.  Versailles Group has closed transactions in all economic environments, literally around the world.

Versailles Group provides clients with both buy-side and sell-side M&A services, and has been completing cross-border transactions since its founding in 1987.  

More information on Versailles Group, Ltd. can be found at www.versaillesgroup.com.

For additional information, please contact

Donald Grava

Founder and President

+617-449-3325

September 2, 2016

Global M&A: Mexico

Regarding Global M&A, Latin America has moved into the spot light for investors.  Both private equity firms and strategic buyers are realizing the potential this location holds, and as of late, Mexico has been of great interest.  Over the past few years the Mexican government has made a big push to increase investment in its country.  Mexico has specifically targeted foreign investors by working hard to address corruption, labor, and tax issues.  Additionally, laws have changed to allow Mexico’s pension funds to invest up to ten percent of their assets in private equity, which will promote economic growth.

Despite new investment, as a whole, Latin America is still struggling.  Brazil is currently in a recession, and Columbia’s GDP growth rates are low.  While these economic problems are of great concern to locals, it allows foreign investors to capitalize on both the exchange rates and discounted assets and companies.  These investors see an opportunity to buy low and sell high.  The World Bank recently announced that by 2030, fifty percent of the population in Latin America will be middle class.  This fact alone has provided investors with confidence that the economies will continue to grow and bounce back in the coming years.

Mexico is popular due to its strategic location.  Not only do the time zones correspond with the United States, but its location is unbeatable.  For firms that are looking to expand supply chains abroad, Mexico is a perfect fit.  As compared to China, producing in Mexico greatly shortens the supply chain, and is generally less expensive.  Coincidentally, China is currently experiencing an overall decline in local manufacturing.  Businesses selling to consumers in the United States are looking to keep supply chains as short as possible, and Mexico is becoming the cheapest and easiest way to do it.

Strategic buyers are not the only group interested in Mexico; private equity firms are moving in too.  The volatility in the region is attractive, especially for investors who have a longer time horizon.  Experienced investors are making purchases not bothering to worry about short term problems, but rather focusing on the long term gain.  Mexico has now surpassed Brazil as the most popular destination for private equity investment in Latin America.

All in all, over the last 10 years the focus of M&A in Latin America has changed significantly.  Argentina was previously a hot spot for deals; however, Brazil then started to gain popularity and most of the investment activity.  Brazil is still very exciting for foreign investors as they are able to buy companies at deep discounts, but now investors are also exploring Mexico.  Another country that currently presents unique investment opportunities is Chile, which may provide more stability than other Latin American countries.

Versailles Group is a 29-year-old Boston-based investment bank that specializes in international mergers, acquisitions, and divestitures.  Versailles Group’s skill, flexibility, and experience have enabled it to successfully close M&A transactions for companies with revenues between US$2 million and US$250 million.  Versailles Group has closed transactions in all economic environments, literally around the world.

Versailles Group provides clients with both buy-side and sell-side M&A services, and has been completing cross-border transactions since its founding in 1987.  

More information on Versailles Group, Ltd. can be found at www.versaillesgroup.com.

For additional information, please contact

Donald Grava

Founder and President

+617-449-3325

August 9, 2016

M&A Activity - First Half 2016

Top Five Countries

With regard to M&A in the global arena, it’s fascinating to observe which countries attract the most activity and how that evolves over time.  The charts below reflect the top five countries with the highest deal value and volume for the first six months of 2016.

The United States and China have been able to maintain their M&A leadership in the first half of 2016.  In terms of deal volume—the number of transactions completed worldwide—the US accounted for 23% of the deals completed while China captured 10% of the deals worldwide.

The chart below represents the number of M&A transactions completed by country in the first six months of 2016.  The US and China dominate this category, with 10,151 and 4,519 deals completed respectively.  When compared to the first quarter, the breakdown by volume for these five countries has remained remarkably similar.  Each country has been able to continue closing deals at roughly the same pace. 

Represented in the chart below is the value of M&A transactions completed by country, for the top five countries, in the first six months of 2016.  The US and China are again leaders in this category.  Collective deal value in the United States reached US$633,441MM, and China’s total transactions were valued at US$390,570MM.  Switzerland remains in the top five countries for deal value, which is uncommon; however, during Q1 Syngenta was acquired by ChemChina, and this one large deal is in part responsible for Switzerland’s high rank.  

Two countries to keep an eye on for the remainder of the year are Australia and France.  Lately, Australia has been receiving media attention for potential growth in M&A deals.  For the first half of 2016, Australia came in only 282 deals behind Germany.  It will be interesting to see if Australia is able to push up into the top five countries for volume next quarter.  Likewise, France is trailing Canada in the rankings for deal value so far in 2016.  As M&A activity is likely to experience shifts throughout Europe after the Brexit vote, M&A activity by county may look slightly different next quarter.

Versailles Group is a 29-year-old Boston-based investment bank that specializes in international mergers, acquisitions, and divestitures.  Versailles Group’s skill, flexibility, and experience have enabled it to successfully close M&A transactions for companies with revenues between US$2 million and US$250 million.  Versailles Group has closed transactions in all economic environments, literally around the world.

Versailles Group provides clients with both buy-side and sell-side M&A services, and has been completing cross-border transactions since its founding in 1987.  

More information on Versailles Group, Ltd. can be found at www.versaillesgroup.com.

For additional information, please contact

Donald Grava

Founder and President

+617-449-3325

August 4, 2016

M&A in Brazil - Bargain Hunt

At this point in time, Brazil is providing M&A buyers with incredible opportunities for a number of reasons.  Despite a history of healthy economic growth, Brazil’s economy has recently lost momentum.  The country has officially been in a recession since the end of 2014, with no immediate recovery in sight.  Inflation is now over 10%, and unemployment reached 9% in 2015.  Additionally, the Brazilian stock market has plummeted along with its currency.  The chart below depicts the decrease in the value of the Brazilian real in comparison to the US dollar.

Compounding the economic problems, Brazil is experiencing temporary political unrest due to a large corruption scandal.  There isn’t much hope for economic improvement in 2016; however, once the political turmoil settles, economists are optimistic about what 2017 will bring for the Brazilian economy.  Brazil boasts a large domestic market, with a variety of innovative industries and an abundance of natural resources.  The previous decade’s economic growth averaged around 4 to 5 percent per annum.  It is likely that the economy will start to grow at the tail end of this crisis, as the Brazilian government has plans to address the economic problems in the form of cutting public spending and implementing policies through the Central Bank.

What does this mean for foreign investors?  Brazilian companies are the cheapest they have been in years, and with a vast array of investment options.  In short, Brazil presents a unique opportunity.  This is echoed by the fact that foreign investors are flocking to the region, and are beginning to outpace local investors.  The chart below compares foreign investors to Brazilian investors.

M&A buyers that can look beyond two or three years will be able to achieve excellent returns.  The Brazilian economy has the capability for strong and consistent growth.  Over the years, the middle class in Brazil has grown, literacy rates have increased, and Brazil is the 8^th or 9^th largest economy in the world.

In conclusion, an M&A buyer can capitalize on the current domestic situation, which has resulted in slashed valuations and many opportunities where sellers have to sell.  Furthermore, foreign investors will also be able to capitalize on the strong US dollar as compared to the Brazilian Real, which make Brazilian acquisitions incredibly affordable and will enable investors or acquirers to earn a healthy return on their investment in the future.

Versailles Group is a 29-year-old Boston-based investment bank that specializes in international mergers, acquisitions, and divestitures.  Versailles Group’s skill, flexibility, and experience have enabled it to successfully close M&A transactions for companies with revenues between US$2 million and US$250 million.  Versailles Group has closed transactions in all economic environments, literally around the world.

Versailles Group provides clients with both buy-side and sell-side M&A services, and has been completing cross-border transactions since its founding in 1987.  

More information on Versailles Group, Ltd. can be found at www.versaillesgroup.com.

For additional information, please contact

Donald Grava

Founder and President

+617-449-3325

July 20, 2016