The 2020 Mid-Year Economic Update_long

M& A at a Record High

Last week continued to be a blockbuster for M & A, with a strong showing by strategic players in the industrial and construction arenas: $400M Kendall Electric will buy $120M Roden</a>; Lewis-Goetz has acquired Samson Industrial</a>; and Saint-Gobain will purchase Norandex.

A recent survey shows that a record $2.7 trillion was spent worldwide on mergers and acquisitions in the first half of 2007 (story). Total mergers in the first half are 67% ...

Last week continued to be a blockbuster for M & A, with a strong showing by strategic players in the industrial and construction arenas: $400M Kendall Electric will buy $120M RodenLewis-Goetz has acquired Samson IndustrialSaint-Gobain will purchase Norandex.

A recent survey shows that a record $2.7 trillion was spent worldwide on mergers and acquisitions in the first half of 2007 (story). Total mergers in the first half are 67% higher than last year’s first-half total. Private-equity backed buyouts accounted for 36% of the U.S. total, compared with 24% of the total in the first half of 2006.
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The survey however also points out that private equity professionals are concerned the easy availability of debt financing that has helped fuel the record number of transactions will tighten. Nearly 70% in the ACG/Thomson DealMakers Survey say the debt markets will be worse in the next year.
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Distribution M & A experts have shared the same concern with MDM, saying that it’s likely that record valuations will plateau in the next year or two. Valuations are in part a reflection of the huge amount of money raised by financial buyers. As Vetus Partners’ Jim Miller said during a recent MDM audio conference, the pressure is on to deploy this capital.
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“Not only is there more equity, not only are the debt markets continuing to be liquid, but more of&nbsp ; that capital is dedicated to distribution than even last year, which was at a record high,” he says. More than 100 private equity funds are actively targeting distribution.

More information on distribution M & A can be found in the MDM Special Report: Distribution M & A Update 2007, a compilation of MDM reporting on M & A trends.

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