Firmex and Mergermarket Release Study on the Valuation Gap in Mid-Market M&A

Share Article

Macroeconomic downturn may temper seller expectations, allowing buyers and sellers to finally find consensus on valuations.

“The valuation gap has presented a roadblock to a surprising number of deals in recent years,” says Joel Lessem, CEO of Firmex. “We hope this report sheds some light on what’s to come, and what factors could change this in the coming year.”

Amidst a valuation gap between buyers and sellers, corporate cash holdings and private equity dry powder remain at high levels and appetite for mid-market deals should remain robust, according to Mid-Market M&A: The Valuation Gap, presented by Firmex and Mergermarket.

According to interviews with six M&A professionals and data provided by Mergermarket, a downturn in the US economy could potentially help close the valuation gap between buyers and sellers.

However, some reservations remain. “Corporate buyers are paying more attention to [the mid-market] and that leads to a rising buyer base,” said Oscar David, Winston & Strawn in the report.

“A downturn might close the gap a little bit, as well as dampen the number of deals,” added David Althoff, managing director at Duff & Phelps. “I would keep in mind that it’s not one big monolithic M&A marketplace.”

Not surprisingly, the majority of experts interviewed pegged the technology sector to see the most pronounced valuation gap, followed by life sciences. Private equity sponsors remain disciplined in their approach to acquisitions with some firms shifting their focus to look for add-on acquisitions and finding ways to close the valuation gap.

“The valuation gap has presented a roadblock to a surprising number of deals in recent years,” says Joel Lessem, CEO of Firmex. “We hope this report sheds some light on what’s to come, and what factors could change this in the coming year.”

The complete report is available for download here: http://www.firmex.com/company/resources/mid-market-ma-the-valuation-gap-march-2016

Firmex
Firmex is a global provider of virtual data rooms and a secure document sharing platform. From its Toronto, Canada office, the company helps run over 10,000 new data rooms a year with more than 75,000 companies worldwide trusting Firmex as their virtual data room provider. Millions of documents are exchanged each year using Firmex, supporting processes that include financial transactions, mergers and acquisitions, corporate governance, regulatory compliance, litigation, and procurement. For more information, go to: http://www.firmex.com/get-started/

Mergermarket
Mergermarket is a business development and market intelligence tool designed specifically for the M&A sector and provides proprietary intelligence and analysis on corporate strategy across the world. With around 200 M&A journalists talking directly to senior executives, dealmakers and other key players in over 60 locations globally, Mergermarket reports on the whole deal life cycle, from mapping out companies’ early stage strategic intentions to tracking deals before they develop and providing real-time news on live events, thereby creating a large window of opportunity. Subscribers can also mine for trends, patterns and deal ideas using Mergermarket’s comprehensive deals database and regular data-driven editorial analysis and commentary.
Visit http://www.mergermarket.com to learn more.

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Mark Wright
Firmex Virtual Data Rooms
+1 (416) 840-4241 Ext: 281
Email >
@Firmex
Follow >
Follow us on
Visit website

Media

deal flow changedeal flow map