New Insights from our friend Roger Neu over at The M&A Law Firm in Irvine, CA. Check out the things happening in the merger and acquisitions marketplace and see how it fits with your plans and strategies. Thanks Roger.
THE M&A LAW FIRM
MERGERS AND ACQUISITIONS
“INSIDE THE M&A ROPES”
You may want to rethink how M&A statistics apply to your company. Clients come to me with expectations based on middle market valuations they have read about in the paper or other M&A publications. What they don’t realize is that the term “middle market” in most publications is referring to companies that have adjusted earnings of $35M to $70M (not revenue, but “earnings”). Multiples and terms and conditions may vary considerably between a “middle market” company and a “lower middle market” company with earnings in the $5M to $20M range.
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M&A ACTIVITY IN THE NEWS
Cirque du Soleil is being sold in a $1.5B deal to a private equity group led by a Chinese firm. The intent is to expand these acrobatic shows into China to meet its growing middle class desire for more entertainment. Past attempts to expand into China were not successful.
Segway is also in discussions to be purchased by a Chinese firm that makes a competing product. Terms have not been disclosed. Segway has had limited success in getting its products accepted in the US as a primary source of transportation. The Chinese apparently view these type of scooters as a desirable status symbol with demand from both private and governmental parties.
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VALUATIONS REMAIN STRONG
Valuations still remain strong in the M&A market and there is less concern (whether correct or not) that interest rates will rise. Low rates drive more lending which means higher valuations. Please contact Roger L. Neu at (949) 863-1700 or roger@rneulaw.com with any M&A questions.
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