Global M&A activity in the first quarter of 2016 was lower than both Q1 2015 and Q1 2014.  Typically, the first quarter is slower than the fourth quarter and this year was no exception.  In terms of volume, Q1 2016 was about 21 percent lower than Q4 2015.  By comparison, Q1 2015 was only 7 percent lower than Q4 2014.

As depicted in the graph below, in terms of volume, Q1 2016 was about 18 percent slower than both Q1 2015 and Q1 2014.

In terms of value, Q1 2016 was dramatically lower than Q1 2015 and about 8 percent lower than Q1 2014. 

M&A in the US and cross-border transaction activity remain strong; however, not exempt from this slowing.  Sellers should move quickly to complete transactions while buyers should start to prepare to make acquisitions as valuations will surely drop if this trend continues.

Middle-market M&A activity, as measured by volume, was the lowest that it has been in 10 years.  By value, M&A activity in January was the lowest since 2009. 

There are many theories about why this is happening, for example, a volatile stock market, declining energy prices, rising interest rates, the slowing of China’s economy, and uncertainty caused by the US election process.  We would not deem this to be a trend unless we see this continue for a few months.

For sellers, multiples seem to be dodging this lower level of activity.  And, in the lower middle market, that is, companies with less than US$100 million in revenues, there seems to be plenty of interest, activity, and definitely no degradation of multiples.

As we’ve all noted, the Fed may not be able to raise interest rates, energy prices can’t fall much more, and an election won’t stop people from completing synergistic or opportunistic transactions.  Thus, there are plenty of good opportunities on both the sell and buy side.

If you’re interested in completing a transaction in 2016, either buy-side or sell-side, now is a good time to explore and develop objectives.

Founded in 1987, Versailles Group is a Boston-based investment banking firm specializing in mergers, acquisitions, divestitures, and cross-border middle-market transactions.  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.

If you are interested in discussing your M&A objectives, please do not hesitate to contact us. 

Donald Grava
Founder and President
+1 617-449-3325 (Direct)

As one can see from the chart below, global M&A, as we’ve reported before, is flying high!

M&A activity for the 11 months ended November 2014 is at a record high since 2011 as buyers and sellers are coming together at a very rapid pace. Our belief is that many companies and entrepreneurs want to get deals done before interest rates increase, there is a change in US President, or there is another economic or political crisis. Many people remember the depths of the Great Recession and are taking the necessary steps to ensure their companies and personal net worth are better protected from any future economic downturns.

Buyers are strengthening their companies and sellers are paying off debt, diversifying, and in some cases retiring. What are you doing to increase or protect your shareholder value?

M&A deal activity is continuing at a rapid pace. Global volume this year has already exceeded US$3 trillion and will likely surpass last year’s record volume.

One particularly bright spot for M&A activity has been Europe. For the first time in recent history, European M&A has expanded dramatically. For the first three quarters of 2014, this has meant nearly US$800 billion of transaction volume. By comparison, for the same time period last year, there was less than US$500 billion of transaction volume in Europe.

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.

2012 was a year of uncertainty. There were notable events, such as the U.S. Presidential election, fiscal cliff, and the status of Greece’s future in the European Union, that caused many companies to delay their execution of various growth strategies.

Despite these hesitations, on a global basis, the number of Middle Market M&A transactions increased by 4% from 2011 to 2012.

Looking forward, we expect that some companies will retain a conservative strategy due to the upcoming U.S. debt ceiling drama and the European socio-economic issues. However, shrewd companies will take advantage of the vast number of global growth opportunities and make strategic offensive and defensive acquisitions. As a result, we expect there will be a higher level of M&A activity in 2013.

The year 2012 was a tumultuous time, filled with uncertainty and apprehension as the global community grappled with a series of significant events. From the highly anticipated U.S. Presidential election to the looming threats of the fiscal cliff and the precarious future of Greece within the European Union, these key moments left many businesses feeling cautious and hesitant about their growth strategies. As companies navigated through the turbulent economic landscape, many chose to delay their plans for expansion, opting instead to adopt a more conservative approach.

Looking ahead to the future, it is likely that some companies will continue to tread carefully, especially in light of the upcoming U.S. debt ceiling drama and the ongoing socio-economic challenges in Europe. However, for those with a keen eye for opportunity, there is a wealth of global growth possibilities waiting to be seized. By strategically pursuing both offensive and defensive acquisitions, these savvy businesses will be well-positioned to capitalize on the changing landscape and drive higher levels of M&A activity in 2013.

Versailles Group is a 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.

As 2012 comes to a close, we’d like to wish you season’s greetings with our best wishes for a very happy holiday!

With less than a month left in 2012, this year was an exciting year for global M&A – all regions experienced at least a 3% increase in M&A activity, except for Europe, which saw a 9% decrease. The Asia/Pacific and Latin America/Caribbean regions experienced the largest increases, 5% and 11%, respectively. The surge in activity in these two regions was primarily due to cross-border M&A whereby companies in one region seized an opportunity in another region.

As we transition into 2013, there will be new opportunities worldwide. As a great man once said, “There are no problems, only opportunities.” Some of the questions facing the world are:

• • How will the political and economic turmoil in Europe be resolved?

  • How will the Democrats and Republicans resolve the “Fiscal Cliff” issue in the United States?

  • Will China continue growing at a rapid pace, or will it begin approaching the “hard landing” many predict will occur?

  • Will GDP growth in Brazil and the other Latin American countries accelerate in 2013?

In a constantly evolving global market, challenges will always arise. However, the key lies in seizing the opportunities that present themselves worldwide to strategically position your business for not just growth, but sustained profitability. By staying ahead of the curve and actively seeking out potential avenues for expansion and development, businesses can navigate through obstacles and emerge stronger than ever. It's not just about overcoming challenges, it's about leveraging them to propel your business towards success in an ever-changing landscape.

Versailles Group is a 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.

Worldwide, middle-market M&A transactions, those with transaction values less than US$1 billion, have been occurring at a rapid pace in the first month of Q4. Middle market M&A in the United States, in particular, is seeing tremendous activity whereas M&A in Europe is continuing to struggle.

In the US, at this pace, we expect over 4,000 transactions in Q4. This will represent an increase of over 11% as compared to the 3,604 transactions in Q4 of last year. This growth can be explained by a number of factors, but most importantly, corporations are using some of their large cash balances and the ability to issue low-interest debt to pursue synergistic and other acquisitions.

Traditionally, companies use their excess cash for either capital expenditures or acquisitions. According to a recent study published by Goldman Sachs, capital expenditures are not increasing as companies are deploying their cash for acquisitions, which provide immediate access to growth and less risk. This is, perhaps, the largest single driver in the current middle market M&A boom in the US. Furthermore, low interest rates are enabling companies to issue debt quite cheaply, thereby helping companies without enough cash to fund acquisitions.

In Europe, the M&A landscape is facing challenges due to various factors such as economic uncertainty, political instability, and regulatory changes. These uncertainties are causing hesitation among companies to engage in M&A activities, leading to a slower pace of transactions compared to the US market.

Despite the struggles in Europe, the Middle East, and Asia are also experiencing an increase in middle market M&A transactions. The Middle East, in particular, is seeing a surge in activity driven by the region's efforts to diversify its economy and attract foreign investments. Asia, on the other hand, is benefiting from a strong economic growth trajectory and an increasing appetite for cross-border acquisitions.

Overall, the global middle market M&A landscape is dynamic and evolving, with different regions experiencing varying levels of activity. Companies are strategically leveraging their resources and taking advantage of favorable market conditions to pursue growth opportunities through M&A transactions.

Versailles Group is a 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.

The most notable M&A news in Q3 was that there were more transactions in the United States/Canada region than there were in Europe. This is unusual, but we fully expect it to continue in the coming quarters as there seems to be limited progress in the resolution of the economic issues in Europe.

In Q3, the total number of M&A transactions in the United States/Canada increased by 137 to 4,372, which represented a 3% increase year-over-year. The Africa/Middle East, Asia Pacific, and Latin America/Caribbean regions all saw larger percentage increases during the same time period, 4%, 9%, and 9%, respectively. The only region that experienced a decrease in Q3 was Europe, where M&A activity dropped by 12% to 4,220.

The net result of all of these changes was that the combined number of transactions worldwide fell by 1% year-over-year, from 12,146 to 11,993.

Historically, Q4 is the busiest quarter for M&A. Therefore, we are expecting a strong fourth quarter in most regions.

The most notable M&A news in Q3 was the significant increase in transactions occurring in the United States/Canada region compared to Europe. This shift is quite unexpected, but it appears to be a trend that will persist in the upcoming quarters due to the ongoing economic challenges faced by European countries. The divergence in M&A activity between these two regions reflects a broader narrative of economic uncertainty and market dynamics that are influencing global investment trends.

Versailles Group is a 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.

Worldwide, the number of M&A transactions, year-to-date, has increased, year-over-year, by nearly 1%. While the Africa/Middle East, Asia Pacific, and Latin America/Caribbean regions have all seen increases of approximately 10%, it has been a different story for the United States/Canada and Europe regions. The United States and Canada have experienced a 1% increase, while Europe has suffered a 6% decrease.

It is no shock that M&A in Europe is slowing down as a result of the economic and political turmoil over the past couple of years; however, it may be surprising that M&A activity in the other regions has seen such large gains. We believe that companies will continue diversifying into the Asia Pacific and Latin America regions as the uncertainty about Europe’s future continues.

The economic and political uncertainties in Europe have undoubtedly contributed to the decrease in M&A transactions in the region. Companies are likely hesitant to engage in significant deals amidst the turbulent environment. On the other hand, the robust growth in the Asia Pacific and Latin America regions may indicate a shift in focus for companies looking to diversify their portfolios and expand into more stable markets. As Europe continues to navigate its challenges, it is expected that M&A activity in these regions will continue to flourish.

While the slowdown in M&A activity in Europe is understandable given the economic and political challenges the region has faced, the significant gains in the Asia Pacific and Latin America regions may come as a surprise to some. As companies seek to mitigate risks and explore new opportunities, we anticipate a continued trend of diversification into these growing markets. The uncertainty surrounding Europe's future has undoubtedly influenced this shift in focus, with businesses looking to establish a stronger foothold in more stable and promising regions. As the global landscape evolves, it is clear that companies are adapting their strategies to navigate the changing tides of the M&A landscape.