M&A Trends for 2014

Steve Sink is the founder and managing partner of Phoenix Affiliates Ltd.

The opportunity for strong M&A activity is set for 2014 and the coming years. The key drivers are:

1.  Many M&A funds (Private Equity Groups) are scheduled to exit from previous acquisitions, freeing up funds for new acquisitions. 
2.  In anticipation of higher interest rates, forward-looking M&A funds will be forced to focus on increasing the long-term value of their current holdings, if they are to achieve their sales goal.
3.  Low interest rates (cheap capital) currently support the ability to do deals now and the urgency to do deals before the increase in interest rates.
4.  Banking regulations have had a negative impact on M&A and thereby created a lending opportunity in the private sector for capital.
5. There is a growing confidence in forward earnings. This confidence is somewhat motivated by the anticipated change in the administration.
6.  Companies can recapitalize at very favorable terms and rates -- at much lower costs than an IPO.
7.  Higher confidence levels will lead to sale higher multiples.
8.  Government regulations are the main reason for creating uncertainty and the ability to make capital investments with confidence.

Steve Sink
Certified Business Intermediary
Merger and Acquisition Master Intermediary
ss@phxaffiliates.com