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"These are good times for diversified U.S.
manufacturers. So why aren't they doing more big
mergers and acquisitions?" asks James Kelleher in
Reuters News. CEO Herb Hankel of Ingersoll-
Rand Co.
remarks: "Once the target is large enough to attract
private equity firms, it becomes all but
unaffordable." Recently buyout shops have paid as
much as 14 times EBITDA. "For our math to work,
we were close to 7 to 8, maybe 10 times."
Source: "MergerTalk." Reuters News. 18 May
2006.
Manufacturers of fasteners, controls, cooling
systems, and sensors have seen strong demands for
their products, allowing them to boost profits and
share prices in addition to absorbing excess
capacity. According to industry observers, the deal
drought is due to the cyclical nature of the industry
and a worry that it is a bad time to buy a company
at its peak.
"Multiples in the $30-billion-in-annual sales North
American metal stamping industry are being stamped
lower due to troubles at the automotive companies
they serve," writes Hammerman. Metal stampers are
usually sold between 5 times and 6 times EBITDA,
down from 6.5 times to 7 times EBITDA three years
ago.
Source: Mergers & Acquisitions Report.June
26,
2006, pg. 1.
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"The b-to-b media M&A marketplace has been going
gangbusters for more than two years now -- and the
party shows no signs of slowing down in 2007.
Valuations for all forms of business media are
expected to be strong this year, according to
AdMedia Partners. The multiple for magazines is
expected to be 7.3 times EBITDA, and the multiple
for events is expected to be 7.6. The multiple for
interactive/on-line assets will be a loftier 9.5," writes
Matthew Schwartz in B to B.
Source: "Media M&A Market Still Going Strong." B
to B. January 15, 2007, pg. 3+.
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According to an analysis by Young and Power, "the
pace of chemical mergers & acquisitions
(M&A) continued to increase in the third-quarter,
according to an analysis by Young & Partners.
Specialty chemical valuations are continuing to rise,
averaging 10.7 times Ebitda in the first three
quarters of 2006, versus 9.6 times for all of 2005,
Y&P says. Deals worth more than $1 billion each
accounted for almost three quarters of the dollar
value during the first nine months of 2006, but only
7% of the number of deals." Source: Wood,
Andrew. "M&A Activity Stays Hot, But Interest in
Commodities Cools." Chemical Week.
November 1, 2006.
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Many of our clients ask us to look for comparable
acquisitions because we know what to look for and
where to find it. We subscribe to Mergerstat,
Thomson Financial M&A, Done Deals and Pratt's
Stats. We've also used Bureau van Dijk's Zypher
database, the most complete source of global
transactions. Industry multiples can often be found in
journal articles, as shown in the abstracts above, in
addition to investment bank reports.
Sincerely,
Jan Davis
JT Research LLC
email:
jt@jtresearch.com
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