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"The multiple of earnings that buyers are paying for
container terminals has climbed so high that AIG
Highstar Capital, which has assembled a portfolio of
95 terminals in the U.S., Mexico and Chile, might
consider taking it public through an initial public
offering at some point. Christopher Lee, managing
partner of the $4.5 billion infrastructure fund, told The
Journal of Commerce's inaugural Container Industry
Investment Conference in New York last week that five
terminals in the Port of New York and New Jersey had
changed hands in the last two years at multiples
ranging from 18 to 24 times trailing EBITDA, which he
termed "fair values." But when DP World launched an
IPO for part of its equity on the Dubai Stock Exchange
last year, the stock price subsequently climbed as
high as 34 times trailing EBITDA. With prices like that,
Lee said AIG Highstar might have to consider taking
the port group public at some point after it has
consolidated its diverse portfolio," according to the
Journal of Commerce, January 21, 2008.
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"Chemical companies will rise to the forefront of M&A
activity, and private equity firms, which borrowed
money to finance deals, will fall behind because
lending markets are tightening, bankers say. Private
equity firms drove multiples up in 2007 since they had
access to cash on easy terms. Multiples and deal
values will be flat to down in 2008 because of the
tightened credit market, says Merrill Lynch. Chemical
companies can make "more reasonable offers" that
will be below 12-times Ebitda, the bank says."
Source: "Global Outlook '08: Hard or Soft Landing
Ahead?" Chemical Week. January 7-14, 2008,
pg. 18.
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Cox Radio has exercised an option to buy WNGC-FM,
WGMG-FM, WPUP-FM, WGAU-AM, and WRFC-
AM/Athens, GA for $60 million, less $12 million
previously paid for the option.
According to Radio Ink magazine, "Bank of
America analyst Jonathan Jacoby estimates
that the stations will bring in about $4 million in
EBITDA in 2008, making the sale multiple about 15-
times cash flow -- a figure he called "high, given the
current underlying radio trends," though he did say
that "strategically, the acquisition makes sense."
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According to Patrick Hurley, Managing Director,
MidMarket Capital Advisors, "How things look for 2008
depends on how the food chain you live in operates.
Our buy-side corporate clients are aggressively
bidding (10x EBITDA) on late-winter and spring 2008
closings for all-cash basis, for manufacturers with
proprietary products (gross profit 35%+) that are still
growing. Discretionary sellers are getting and will
continue to get plenty of attention from strategic buyers
happy to have a less crowded field. Intermediaries for
sellers of $10-25 million EBITDA companies or
representing strategic buyers in that strata will do just
fine in the coming year, if they are thoughtful and work
hard.
.
Source: "ACG's Year in Review." Mergers and
Acquisitions. January 2008, pg. 68.
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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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