After beginning his professional service career at Price Waterhouse, Bob became the first professional employee of Frazier & Deeter, a nationally ranked CPA and advisory firm, shortly after the company was founded in 1981. In 1985, Bob became a partner and over the next 18 years he served the firm as head of the Audit and Strategic Consulting services departments. In 2000 Bob founded iLumen, Inc., the CPA profession’s leading business intelligence and analytical platform that today is used by leading CPA firms and financial institutions across the country. Bob served as CEO of iLumen through 2010 and is currently an active board member and advisor to the company. In 2011, Bob returned to Frazier & Deeter where he served as the leader of the firm’s entrepreneurial consulting practice and directs the firm’s strategic growth initiatives on both a national and local level. He is now the firm’s national practice leader in private equity.
- The private equity market in the Southeast has accelerated in recent years, with a lot of money chasing a limited number of quality deals.
- A good deal of private equity firms are eager to invest in traditional, family-owned manufacturing and distribution companies.
- Attention is shifting toward growth equity, which is more about making a minority investment in a company and betting on the existing management team.
- The technology industry is driven more by revenue than the traditional Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)-based valuation model.
- The Southeast is a great place to do business because of its business-friendly environment and growing entrepreneurial infrastructure.
Continue reading The Private Equity Phenomenon and the Fall of the IPO: An Interview with Bob Woosley
Graeme Frazier is a partner in GF Data Resources LLC, which provides reliable transaction data on lower middle market transactions completed by private equity sponsors with $10mm to $250mm in enterprise value, and he is also president of Private Capital Research LLC, a consulting firm that provides investment opportunities to middle-market private equity firms and corporate clients.
• Overall, the market is very robust across the board. The Southeast is as healthy, if not healthier, than any other market in the country.
• Q1 was statistically similar to Q4, which bodes very well for the market. Historically, the volume of M&A deals tends to decline by about 25 percent from Q4 to Q1. Valuations were also up in Q1 2015. We’re likely to see a record year if things continue with this momentum.
• The average EBITDA multiples at which companies are selling were at historic levels in several market segments in Q1 2015. For example, the average multiple for healthcare services companies was 8.1x, and it was 7.7x for technology deals completed by private equity sponsors. Other notably robust sector multiples included 7.3x in publishing/media, 7.3x for distribution, 6.7x in business services and 6.6x in manufacturing.
• While this may all seem too good to be true, it isn’t. The fundamentals don’t appear to be incredibly overheated; debt multiples are up but not over the top and pricing on leverage is reasonable.
• Owners need to consider risks from the buyer’s perspective. Sellers tend to have blind spots for things relative to real estate leases, supplier contracts and customer contracts.
• Finding the right private equity partner is critical. Sellers should be looking for someone who has experience with similar companies and who thoroughly understands the industry. The right partner should have experts on staff and a proven track record of companies they’ve done business with. Continue reading Record Year is Within Reach: An Interview with Graeme Frazier