The chart below shows the first six months of M&A activity for both 2013 and 2014. In all geographies, the volume, year over year, has increased.

The gradual improvement in the world’s economies is driving this increase in M&A activity and pushing multiples up. For example, across all industry sectors, the Enterprise Value to Revenues multiple, has increased from 1.17x in 2012 to 1.26x in 2013 to 1.50x in 2014.

Versailles Group is pleased to announce that it was awarded the Financial Adviser of the Year Award for the sale of Photon Technology International Inc. to Horiba Ltd.

Here is the link to the actual Press Release from Yahoo Finance.

The text of the Press Release is listed below for your convenience.

BOSTON, July 15, 2014 — Versailles Group, Ltd. (www.versaillesgroup.com) announced today that it was awarded the Financial Adviser of the Year Award for the sale of Photon Technology International Inc. (www.pti-nj.com), to Horiba Ltd. (www.horiba.com) (TSE:6856). Versailles Group acted as the exclusive financial advisor to Photon Technology International Inc. Terms were not disclosed. The transaction closed on Feb. 10.
The award was granted by UK-based AI Global Media, Acquisition International Magazine and DealFlow Source. Voted for by a global network of expert M&A professionals, advisers, clients, peers, and industry insiders, the award celebrates excellence in all areas of M&A.

The winner of this award was determined by three factors. First, voting forms were distributed to Acquisition International Magazine’s dedicated base of 53,000+ subscribers and over 150,000 individuals in its in-house database. Second, Acquisition International does substantial in-house research. Third, Acquisition International asks nominees to supply supporting documentation which they feel may cement their nominations. All of this information is used to make a determination as to which firm will receive the Financial Adviser of the Year Award.

About Versailles Group
Versailles Group, a 27-year-old Boston-based investment bank that specializes in international mergers, acquisitions, and divestitures, advised Photon Technology International Inc.’s shareholders on the transaction. Versailles Group works with companies in the U.S., Europe, Canada, Asia, and South America.

About Acquisition International Magazine
Acquisition International is a monthly magazine published by AI Global Media Ltd., a publishing house that specializes in corporate finance news and reporting. AI works alongside leading industry analysts to ensure it publishes the most up to date figures and analysis. Acquisition International has a global circulation, which brings together all parties involved in deal making. In an increasingly global deal market Acquisition International Magazine is uniquely positioned to reach the deal makers that matter.

Worldwide M&A activity is continuing at a rapid pace this year for a number of reasons including the availability of credit, the robust liquidity of large companies and private equity firms, and the continued improvement in the economy.

By sector, Financials, Healthcare, and Consumer Discretionary transactions accounted for over half of the M&A transaction value. If one examines M&A transactions by the number of transactions, 66 percent of the transactions were completed in the Financial, Consumer Discretionary, and Industrials sectors.

The following pie chart and table show M&A activity by sector.

M&A activity was very strong in Q1; in fact, the M&A market this past quarter was more active than any quarter in the last several years. April and May continued this trend with a high level of activity in terms of both deal value and the number of transactions.

This heightened activity is driving multiples up as depicted in the chart below, which shows the percentage increase in TEV/Revenue multiples by industry from the last 12 months to the last 90 days.

Why do deal multiples matter? If you’re a seller, you’ll receive more value for your company. If you’re a buyer, you’ll end up paying more. Therefore, it’s an opportune time for sellers to put their company on the market. Similarly, buyers should consider a transaction before the multiples increase further.

M&A activity in the first quarter of 2014 was quite strong. The value of transactions announced in the first quarter exceeded both 2012's and 2013’s first quarter. The value of announced transactions in the first quarter of 2014 also exceeded the last quarter of 2013, which is very dramatic as the fourth quarter is usually the busiest quarter of the year for M&A.

They say that April showers bring May flowers. M&A is similar! Devising a strategy and working hard to insure the proper execution always results in a superior transaction. I’ve been doing M&A for over 30 years and have helped a large number of corporations and entrepreneurs achieve excellent results whether they are buying or selling a business. One of the key ingredients is careful thought to insure that the strategy and tactics will achieve the desired result.

With regard to building shareholder value, business owners and companies frequently ask themselves:

Is this the best time to sell my company or a part of my company?

Is this the best time to buy a company or part of a company?

The charts below demonstrate from both a value perspective and the number of M&A transactions announced that now is the time to pursue these strategies.

The dramatic run-up of both deal value and number of transactions announced in Q1 2014 versus Q1 2013 is very evident, despite the fact there are still 15 working days left in March.

Versailles Group is pleased to announce that Photon Technology International Inc., an electro-optical systems and components manufacturer with offices in the U.S., Canada, U.K., and Germany, has been sold to Horiba Ltd., a world leader in analytical and measurement systems that is headquartered in Kyoto, Japan. Versailles Group represented Photon Technology International.

The text of the Press Release is listed below for your convenience.

BOSTON, Feb. 12, 2014 -- Versailles Group, Ltd. (www.versaillesgroup.com) announced today that Photon Technology International Inc. (www.pti-nj.com), with operations in the U.S., Canada, Germany, and U.K., has been acquired by Horiba Ltd. (www.horiba.com) (TSE:6856). Versailles Group acted as exclusive financial advisor to Photon Technology International Inc. Terms were not disclosed. The transaction closed on Feb. 10.

Versailles Group, a 27-year-old Boston-based investment bank that specializes in international mergers, acquisitions, and divestitures, advised Photon Technology International Inc.'s shareholders on the transaction. Versailles Group works with companies in the U.S., Europe, Canada, Asia, and South America.

Founded in 1983, Photon Technology International Inc. ("PTI") is a leader in electro-optical systems and components technology. The company's light based systems are used in laboratories for research, healthcare, industrial processes, quality control, biomedical, environmental science, and many other applications. PTI pioneered a line of proprietary and / or patented optical building blocks which form the basis of all light-based instrumentation. The company sells these building blocks as standalone units and uses these building blocks to develop its open architecture fluorescence systems. PTI is the world leader in microscopy based fluorometers, especially for ion imaging, in part due to a long-standing research and development collaboration with a prestigious laboratory in the Faculty of Medicine and Dentistry of the University of Western Ontario in Ontario, Canada.

"The acquisition of PTI fulfilled the primary shareholders' desire for a liquidity event. It also provides a path for the majority owner to retire in the next few years" said Donald Grava, Versailles Group's founder and president. By utilizing Versailles Group's worldwide approach to finding the right buyer, PTI was sold to Japan-based Horiba. This will enable PTI the ability to sell its products via Horiba's worldwide sales organization. Furthermore, it provides Horiba access to PTI's fluorescence spectroscopy products, and PTI's low cost production capabilities in Canada.

Headquartered in Kyoto, Japan, Horiba Ltd. is the world leader in analytical and measurement systems in the fields of engine emissions, scientific analysis, industrial and process control, environment monitoring, semi-conductor process control, healthcare, and biotechnology. Founded in 1945, Horiba is a global company that has offices in Asia, Europe, North America, and South America. The company is publically traded on the Tokyo Stock Exchange and has annual revenues of approximately ¥118 billion.

There are many misconceptions about international mergers, acquisitions, and divestitures.

The five biggest myths are:

That cross border transactions are not worth the effort.

Cross border transactions can be very productive and profitable whether you’re on the buy or sell side – depending on the opportunity. Many companies like to expand into new markets and do well; for example, Illinois Tool Works, the multi-billion dollar US company has made over 30 acquisitions in Brazil alone. Obviously, they have the vision and resources to complete these deals and would have stopped long ago if they were unprofitable.

That foreign buyers always pay more when acquiring a company.

Foreign buyers sometimes pay more for an acquisition in a different country to buy their way into a market. But, that’s not always the case. Many foreign buyers are careful buyers and only pay for value.

That a cross border transactions will take an impossibly long time.

Cross border transactions can take extra time as sometimes due diligence will be slowed down by the need to translate documents, to obtain the necessary approvals, understand local customs, etc. However, for an organized buyer these extra steps only add a modest amount of time, not the unreasonably long time that many envision.

That foreign buyers or sellers are impossible to work with.

Many people believe that foreign buyers or sellers are difficult to work with. There is absolutely no truth to that. People are people and that’s the same around the world. The percentage of people that are difficult to work with is probably the same in every country. That’s a simple fact of life. And, many foreigners doing international mergers and acquisitions are actually a pleasure to work with.

That foreign sellers always try to cheat the buyers.

Foreign sellers, despite some beliefs to the contrary, are not out to cheat the buyers of their companies. Many countries use different accounting conventions, which do not mean the accounting data has been “cooked.” Frequently, buyers think that whatever is happening in the transaction is directed towards them. Most of the time, it’s just that the buyer doesn’t understand the local customs.

As with any transaction, foreign or domestic, the key to success is thorough due diligence.

Acquiring a software company is much like acquiring any company in that thorough due diligence needs to be conducted. That being said, there are five factors that are critical when examining a software company for acquisition.

M&A Software Transaction: 5 Questions to Ask

(1) Can the seller prove ownership of the source code? It’s important for the buyer to know that the source code is owned or was created by the seller.

(2) Will the software programmers that created the code stay with the company post acquisition? This is important, particularly with complex software programs as it’s difficult for outsiders to understand the architecture and features.

(3) Many times, sellers will offer their key employees, especially software programmers stay bonuses that match whatever time period the buyer is requesting. While that’s fine, many buyers have been quite surprised that after the magical time period that a majority of the employees leave. Therefore, it’s important for the buyer to know that any employee that has been offered a stay bonus may quit as soon as the time period is fulfilled. Such key employees may need additional incentives to stay beyond that bonus period. The best way to cover this is via a rep and warranty in the Definitive Agreement that reveals if stay bonuses are being paid and to whom.

(4) In any business, customers are critical as they provide the cash flow. The important question is how committed are they to the business being sold. If the customers are running important software programs and are worried that the new buyer won’t support them adequately, there might be a huge risk of them switching to another vendor.

(5) Another important point is to make sure that software license sales prior to closing don’t contain future obligations of updates or to maintain such software. That could be a very expensive obligation for a buyer.

If you’re considering hiring a middle market investment bank to either buy or sell a business, it’s important to check the firm out carefully. Successful transactions don’t just happen. To obtain the best result, transactions have to be managed carefully by seasoned professionals.

Middle market investment banks should have both domestic and international reach. That’s important for both buy and sell side transactions in M&A. On the buy side, one shouldn’t miss the chance to view every possible target in the defined geography. On the sell side, it’s important that the seller not miss another possible buyer, who might have offered better terms and more consideration, just because they’re outside of the territory that is most familiar to a particular firm. In other words, one should hire a firm that can truly cover the world. There are always opportunities if one knows how to find them.

It’s also important for middle market investment banks to have the ability to create excellent documentation. Those documents will be the first thing that the potential target or buyer will see about your company. As they say, “first impression counts!” If you take a moment to examine the documents that the prospective investment bank sent you, it’s a giant clue as to how they present their clients.

Another important element to check is the firm’s ability to structure and negotiate difficult transactions. The best way to ferret out this information is to ask about a complex transaction. Another way is to look at the firm’s “tombstones.” Are they all transactions between well-known buyers and sellers or are some of them cross-border and between companies that aren’t so obvious?

Staffing on any advisory engagement is important. How long have the principals of the firm been employed by that particular middle market investment bank? What is their experience level? What are the chances that they will leave the firm mid-transaction? There have been many cases of clients being impressed with the individual handling their project, only to find that they took a better position across town. And, understandably, the transaction stays with the firm, not the individual. As we say, buyer beware.

To summarize, check out your middle market investment bank's experience level, years in business, credentials of the staff and ability to present well.

A little due diligence goes a long way to insuring a successful transaction.