A look at what investors, business owners and their advisors see in the year ahead for mergers & acquisitions in the South.
Presented here are highlights from the first annual Investment Banking South Survey, in which we ask investors, business owners and their advisors to look back to 2014 and forward to 2015 in order to give us a sense of where the merger & acquisition market in the South is today and where it is going.
Conducted in April 2015, this survey was completed by 338 investors, business owners and business advisors – such as attorneys, accountants and bankers – from Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina and Tennessee.
As we note in the first paragraph, this will be an annual survey, with the results of each year building on the previous year, so that we can identify trends and patterns over time that may shed further light on the evolution of the middle market in the South.
Continue reading First Annual Market Expectations Survey
Lee Lloyd is a senior strategic advisor for M&A and financing transactions through his independent advisory firm, J. Lee Lloyd, LLC. He has over 30 years of professional experience in investment banking, business law and accounting. Mr. Lloyd was previously an investment banker with Goldman Sachs and an M&A/corporate attorney recognized in “The Best Lawyers in America.” He has advised clients on deals ranging from $5 million to $6 billion, including cross-border transactions in over 26 countries.
- In an effort to deploy capital, private equity firms and mezzanine funds are aggressively seeking out high-quality companies. As a result, companies of that caliber have numerous options for obtaining capital.
- Since the recession, investors and lenders have become more risk-averse, so lower quality companies have fewer options for obtaining capital.
- North Carolina companies currently are benefiting from readily available capital across all size and stage of maturity classifications.
- The increasing ease and accessibility of cross-border transactions is a major trend. These deals are now more viable because of technology, relationships and experience.
- Early-stage entrepreneurs should pursue external outreach activities to build their networks.
- Out-of-state investors often seek a local co-investor when pursuing early-stage deals.
- In the current M&A middle market, many entrepreneur-owned businesses are looking to grow through add-on acquisitions rather than harvest through exit transactions.
Continue reading North Carolina Adds On: An Interview with Lee Lloyd on M&A Trends and Financing the Growth of High-Quality Companies
Mr. Jones is co-founder of Bull City Venture Partners in Durham, NC, and partner of Southern Capitol Ventures in Raleigh, NC. He previously co-founded and served as the Chief Technology Officer of Orthocopia.com.
- In today’s market, growth is one of the greatest definers of value. Consequently, private equity groups are competing to invest in tech companies because they are fast growing, require relatively little upfront capital and offer the potential for a quicker return.
- Traditional tech centers like San Francisco, New York and Boston are investing outside their region because markets are overcrowded and value can be found in innovative companies in areas like the South.
- The startup market is gaining strength because successful entrepreneurs who have sold their businesses are choosing to reinvest in their local communities by funding early stage companies.
- Industries that have a binary outcome – meaning they are either approved or not, like biotech – are becoming less attractive to investors. Meanwhile, hardware companies like 3D printing are gaining traction.
- Companies should seek to build relationships with funders long before they think they need the money. By engaging funders in the business early on, companies position themselves to call on them when the time is right.
Continue reading Tech Companies Attracting Out-of-Region Investors to North Carolina: An Interview with David Jones
Mr. Harrison is a partner in the Business Development & Capital Markets group with Ridgemont Equity Partners. Based in Charlotte, NC, Ridgemont is the largest private equity firm headquartered in the Southeast.
- Capital is available for companies with a solid business plan and a good opportunity for growth, especially for larger companies with EBITDA over $10 million.
- Debt financing is especially available and from sources in the South and other regions of the U.S. Equity capital is available in the South, but higher levels are resident in money centers outside the region.
- There is capital sitting on the sidelines because there is more money available than quality businesses to invest in, and investors are focused on not overpaying for companies.
- State governments are assisting capital formation by attracting headquarters of major companies, and those companies can help by being great places to work. The talent and capital typically follow.
Continue reading Put Me In, Coach! Capital Is Sitting on the Sidelines: An Interview with Donny Harrison