Dealmakers Target Manufacturing and Industrials

Acquisitions and exits announced in energy, machinery, pharmaceuticals and more

M&A activity spread across a variety of industries, including healthcare and energy. But it was the industrials and manufacturing spaces that took the spotlight with new acquisitions and exits announced by Platte River, Praesidian Capital and others. We cover the latest transaction announcements, plus news from ACG’s 101 Corridor Chapter, in our roundup below.

Manufacturing and Industrials

Platte River’s Belt Power Acquires Dunham Robber & Belting

Belt Power, a distributor of belting and components for conveyor systems, and a portfolio company of middle-market private equity firm Platte River Equity, has announced its acquisition of Dunham Rubber & Belting Corporation. A recent press release said Dunham’s belting operations service a variety of end-markets, including food processing, pharmaceuticals and more. Its takeover creates a new platform that will support Belt Power’s expanded geographic footprint, strengthen fabrication capabilities and grow its technical sales operations, the announcement noted.

The pros & cons of co-brokering for entrepreneurs and the business broker

Co-brokering, also known as dual agency, is a common practice in the business brokerage industry where two or more business brokers work together to sell a business. In this scenario, one broker represents the seller and the other represents the buyer. The brokers split the commission earned from the sale.

There are several pros and cons to co-brokering. One major benefit is that it increases the pool of potential buyers for a business, as both business brokers have access to their own networks and resources. This can lead to a faster sale and a higher selling price. Additionally, co-brokering can also provide a neutral third party to help mediate negotiations between the buyer and seller in the business exit planning.

However, there are also downsides to co-brokering. One major concern is the potential for conflicts of interest during the deal origination. Since both brokers are representing both the buyer and the seller, they may not be able to fully advocate for either party. Additionally, co-brokering can also lead to confusion and mistrust among the parties involved.

For entrepreneurs, co-brokering can be both good and bad. On one hand, having two brokers working together can increase the chances of selling the business quickly and for a higher price. On the other hand, entrepreneurs may feel that their interests are not being fully represented in negotiations.

For business brokers, co-brokering can be a good way to increase the chances of making a sale, and therefore earning a commission. However, it can also lead to conflicts with other brokers and a potential loss of trust from clients.

In conclusion, co-brokering is a common practice in the business brokerage industry that can have both benefits and drawbacks. It can increase the pool of potential buyers and lead to a faster sale, but it can also create conflicts of interest and mistrust among parties involved. Entrepreneurs and business brokers should carefully weigh the pros and cons before engaging in co-brokering. It's important to be aware of the potential risks and conflicts of interest that may arise and to have a clear understanding of the responsibilities of each party involved.

Please note this is a very long article and the real-life scenario may be different. It's always recommended to consult with an experienced business broker, M&A advisor and legal professional to fully understand the implications of co-brokering in your particular situation.

Mergers & Acquisitions Presents its Annual Forecast on the Year Ahead

For many, 2022 couldn’t end fast enough. But will 2023 be any better? Depends who you talk to. Macroeconomic conditions, geopolitical cross-border conflict and a host of other factors have resulted in a cloudy outlook. To get a clearer view on what dealmakers expect in the year ahead, Mergers & Acquisitions tapped some of the industry’s top bankers, lawyers, lenders, advisors, placement agents and business development firms to share their insights on what is likely to come. Let’s go ‘round the horn and hear what they have to say.

Dwayne Hyzak, CEO of Main Street Capital, echoed Forman’s sentiments. “I expect the economy to take additional steps back during the first half of 2023,” Hyzak says. “However, I do believe that the U.S. economy will continue to be resilient and will significantly outperform the rest of the global economy. Once the Fed starts slowing its interest rate activities and eventually reverses some of its actions, the economy should see significant improvement beginning in the third quarter and continuing in the fourth quarter and 2024.”

How to buy a business

Acquiring a business is a complex process that requires careful planning and execution. As a business buyer, it is important to be aware of the key stages of the acquisition process and the most common pitfalls to avoid. This essay will provide an overview of the key stages on how to buy a business, the most common pitfalls for a business buyer, and where most transactions fail.

The key stages of a business acquisition include:

1. Identifying potential targets: The first step in the acquisition process is to identify potential targets that align with the buyer's strategic goals and objectives. This may involve conducting market research, networking with industry professionals, and consulting with M&A advisors.

2. Initial contact and negotiations: Once potential targets have been identified, the buyer will make initial contact and begin negotiations. This may involve drafting a letter of intent, conducting due diligence, and finalizing the terms of the acquisition.

3. Due diligence: Due diligence is the process of thoroughly investigating the target company's financial, legal, and operational aspects. This includes reviewing financial statements, evaluating the target company's management team, and assessing any potential liabilities or risks.

4. Closing the deal: After due diligence is completed and the terms of the acquisition have been agreed upon, the buyer and the target company will finalize the deal by signing a purchase agreement and transferring ownership.

While the acquisition process may seem straightforward, there are several common pitfalls that buyers should be aware of. One of the most common pitfalls is underestimating the time and resources required for due diligence. Buyers should also be aware of potential legal and regulatory issues, such as antitrust laws and intellectual property rights. Additionally, buyers should be mindful of any cultural differences between the target company and the acquiring company, as these can lead to integration challenges.

Another common pitfall is overpaying for the target company. Buyers should be sure to conduct a thorough valuation of the target company and only pay a fair price for the business. Additionally, buyers should be aware of the potential for hidden liabilities and should conduct a thorough due diligence process to identify any potential risks.

Where most transactions fail is when the buyer and the target company have different expectations or when the buyer is not prepared for the acquisition. This can occur when the buyer is not fully committed to the acquisition, when the buyer is not familiar with the target company's industry, or when the buyer has not properly planned for the integration of the target company. Additionally, transactions can fail when the buyer has not thoroughly evaluated the target company's financials and has not conducted due diligence to identify any potential risks.

In conclusion, business acquisition is a complex process that requires careful planning and execution. As a business buyer, it is important to be aware of the key stages of the acquisition process and the most common pitfalls to avoid. By understanding the key stages, common pitfalls, and where most transactions fail, buyers can increase their chances of success and minimize the risks associated with buying a business.

‘Perfect storm’ of inflation, low reimbursement to drive mergers and acquisitions: 2023 Outlook Survey

Nearly 40% of skilled nursing owners, top executives and administrators expect they will sell some or all of their nursing home holdings in the coming year, the McKnight’s 2023 Outlook survey reveals.

Among all respondents, including nurse supervisors, that number declines to 36.3%. But parsing the numbers in any manner shows the sector is likely to see more significant merger and acquisition activity in the coming year, a prediction seen among healthcare M&A experts, as well.

And respondents were firm in their responses. Last year, providers were largely uncertain of their future plans for skilled nursing holdings, with 42% reporting they were “not sure” whether they would sell some, sell all or merge, hold all, acquire some or sell and acquire facilities. This year, just 12% were uncertain.

In this year’s survey, the share of all respondents who think their organization is likely to sell all or merge more than quintupled — from 3.8% to 19.2%. And the share likely to sell some jumped from 7.6% to 17.1%.

“They see what’s ahead,” John R. Washlick, a healthcare M&A attorney and transactions specialist at Buchanan, Ingersoll & Rooney told McKnight’s after reviewing survey data. He said he was unsurprised by the findings, expecting already strong mergers and acquisitions activity to ramp up as financial pressures catch up with nursing home owners who have been struggling to sustain operations and withstand the pressures of escalating costs. 

M&A Is Expected to Pick Up in 2023 as Companies Adapt to Tougher Conditions

Financing challenges disrupted deal making last year, but many companies adjusted in ways that sidestepped market volatility or minimized costs.

Mergers and acquisitions slowed substantially in 2022 as companies faced a mix of financing challenges, including rising interest rates, a pullback in leveraged finance, bond-market jitters and the possibility of a recession.

But many companies adapted, structuring deals to sidestep market volatility and minimize financing costs. In doing so, they provided a glimpse of what’s likely ahead for deal making this year, bankers and advisers said. 

“The M&A market is not going to stop. It just doesn’t work that way. What it does is it evolves,” said Christopher Auld, head of leveraged finance at investment firm Stifel Financial Corp.

Valuations to drive M&A activity in 2023

Valuations of companies and industry consolidation could be a key driver to mergers and acquisitions (M&As) in 2023.

Speaking with StarBiz, Ian Yoong Kah Yin, who is a high-net worth investor and former investment banker, said there are many small to mid capitalisation companies on the local exchange which are trading at handsome discounts to book value and low price to earnings ratio of around single digit or low teens value, making them attractive for acquisition or privatisation targets.

“Additionally, the slowdown in the global economy and a likely global recession in 2023 are compelling reasons for companies in the same industry to merge,” he said, adding financially weaker companies would seek strong companies to acquire them.

What are the Advantages of Buying an Existing Business?

Buying an existing business can be a great way to get your foot in the door. But is it right strategy for you?

There are several benefits to buying an existing business, including:

-An established customer base

-An existing brand and reputation

-A well-developed infrastructure (e.g., website, social media presence)

When you buy an existing business, you're buying more than just assets. You're also getting the people who run it, and the customers they've built relationships with.

That's why we recommend buying an existing business: you get a lot more than just assets when you buy a company. You get an established customer base and relationships with those customers that can help you grow your new business quickly.

When you buy an existing business, you're also getting access to all of the information about its operations—from how many customers it has to how much money it makes. This gives you a huge advantage over starting from scratch!

If you're looking for a quick way to increase your profits without having to spend years building up your own customer base and relationships, this is definitely worth considering.

The advantages of buying an existing business include:

-Buying a business with a proven track record, which means that you can skip the learning curve and start earning money right away.

-More control over your finances and the company's direction, as opposed to starting from scratch with a new venture.

-Being able to keep your current job while working on growing your new business.

-Less risk than starting from scratch, since the infrastructure is already in place.

You don't have to worry about building up your brand, because it's already there, and you also don't have to create all of the infrastructure that you would need in order to run the business. Everything is already in place: accounting software, marketing campaigns, inventory management systems, and more.

By taking over a business you can take advantage of the expertise of the previous owner, who has likely been running the business for years and knows all of its ins and outs.

How do M&A Advisors Make Money?

M&A (Mergers and Acquisitions) advisors, also known as investment bankers, make money through a variety of means, including:

1. Advisory fees: M&A advisors typically charge a fee for their services, which can be a percentage of the transaction value or a flat fee. These fees are typically paid by the company that is being sold or acquired.

2. Success fees: Some M&A advisors also charge a success fee, which is a percentage of the transaction value and is paid only if the deal is successfully completed.

3. Financing fees: M&A advisors may also earn fees for arranging financing for a transaction, such as issuing debt or equity.

4. Underwriting fees: If an M&A advisor is also acting as an underwriter, they can earn fees for underwriting securities offerings related to the transaction.

5. Post-closing fees: M&A advisors may earn additional fees for providing services after the closing of a transaction, such as integration and restructuring services.

It's worth noting that M&A advisors are also required to disclose their fees and compensation to their clients, and the clients have the right to review and approve the fees before engaging their services.

In addition to these traditional ways of generating revenue, M&A advisors may also earn revenue through ancillary services such as corporate finance, valuation, and strategic consulting.

It's worth noting that M&A advisors are also regulated by securities and financial regulators, and they are required to comply with laws, regulations and standards that govern their conduct and the provision of their services.

Determining whether an M&A advisor is a true expert or simply a self-proclaimed expert can be challenging, but there are a few key factors to consider:

1. Experience and expertise: A good M&A advisor should have a track record of successfully completing deals in your industry and should have a deep understanding of the M&A process and market conditions.

2. Network and connections: A good M&A advisor should have a wide network of contacts, including potential buyers and sellers, as well as a strong reputation in the industry.

3. Communication and collaboration: A good M&A advisor should be able to effectively communicate and collaborate with all parties involved in the transaction, including the buyer, seller, and other advisors.

4. Professionalism and ethics: A good M&A advisor should operate with integrity and act in the best interests of their clients at all times.

5. Referral and testimonials: A good M&A advisor should have positive feedback from past clients, and you can reach out to them to ask about their experience working with the advisor.

6. Compliance and regulation: A good M&A advisor should be registered and regulated by the relevant regulatory bodies and should be able to provide the necessary licenses and credentials.

It's also important to note that the best M&A advisor for you may not be the one with the most experience or the best reputation, but the one who can best understand your specific needs and provide the best match for your business. It's always recommended to have a clear understanding of your goals and objectives, and to have a candid conversation with potential M&A advisors to ensure they are the right fit for you.

Latam M&A expected to recover in 2023, IPOs may take longer

After a sharp drop in Latin American deals in 2022, bankers expect a slow recovery next year, led by M&A. IPOs may take longer to resume, due to high global interest rates.

The volume of M&A deals in Latin America fell 35% this year, to $86 billion, according to Refinitiv data.

Roderick Greenlees, global investment banking head at Itau Unibanco Holding SA (ITUB4.SA), said the total value of M&A, although lower than the record year of 2021, was within historical range in the years before.

Bankers predict M&A volumes will grow up to 20% in the region next year as Latin America becomes more relevant among emerging markets. Many emerging market investors have already backed out of Russia due to the war in Ukraine, and are now reducing exposure to China, worried over the impact of erratic COVID policies, tension with Washington and opaque finances of Chinese firms.

Latin America has a great opportunity to increase its share among emerging markets, said Latam M&A co-head at Citigroup Nicolas Roca.

"The volatility related to elections in the region tends to be short lived and won't affect this trend," he said, citing the example of market improvement in Chile a year after the election of leftist Gabriel Boric.

M&A Deal Origination For Corporate Development

Introduction

The success of any corporate development group is highly dependent on the quality and quantity of opportunities that the group is able to identify. While identifying potential acquisition targets may sound simple at first glance, creating a repeatable process can be very difficult. It requires a comprehensive understanding of your company’s strategy, as well as its capabilities, resources and growth needs. In addition, it requires an intimate understanding of the current market conditions.

Combining these factors with future market projections, trends and industry insights is what creates an effective deal origination strategy. Fortunately for those involved in corporate development efforts, there are many proven frameworks that can be adapted to fit almost any organization’s needs. Understanding the buyer’s strengths and weaknesses, in addition to their strategic goals and objectives, is critical for successfully evaluating a target for acquisition

The Art Of Deal Origination

The art of deal origination is a critical component in the corporate development process. It’s the initial identification, evaluation and pursuit of potential acquisition targets. Deal origination requires a comprehensive understanding of your company’s strategy, as well as its capabilities, resources and growth needs.

The Cornerstone Of Any Corporate Development Group Is The Ability To Continuously Uncover And Evaluate New Business Opportunities. This Specific Task, Which Is Sometimes Referred To As Deal Origination Or Transaction Origination, Is Particularly Important Because The Success Of Any Corporate Development Group Is Highly Dependent On The Quality And Quantity Of Opportunities That The Group Is Able To Identify.

It’s critical for any corporate development team to have a consistent approach for identifying new business opportunities—one that gives them access to both market intelligence and internal knowledge regarding their company’s capabilities (or lack thereof). In addition, it must also help them identify gaps in their planning process so that they can adjust accordingly based on changes in their business environment over time.

The most effective way for a company's investment bankers/corporate developers will be able to accomplish this goal involves using many different sources - including industry experts/analysts - who provide valuable insight into what's happening within various markets; competitors' moves, etc.

While Identifying Potential Acquisition Targets May Sound Simple At First Glance, Creating A Repeatable Process Can Be Very Difficult. It Requires A Comprehensive Understanding Of Your Company’s Strategy, As Well As Its Capabilities, Resources And Growth Needs. In Addition, It Requires An Intimate Understanding Of The Current Market Conditions. Combining These Factors With Future Market Projections, Trends And Industry Insights Is What Creates An Effective Deal Origination Strategy.

Fortunately For Those Involved In Corporate Development Efforts, There Are Many Proven Frameworks That Can Be Adapted To Fit Almost Any Organization’s Needs. Understanding The Buyer’s Strengths And Weaknesses, In Addition To Their Strategic Goals And Objectives, Is Critical For Successfully Evaluating A Target For Acquisition. A Holistic Approach Using Balanced Analytical Methods Will Allow Your Deal Origination Effort To Find Quality Targets That Will Further Your Corporate Development Objectives.

Fortunately for those involved in corporate development efforts, there are many proven frameworks that can be adapted to fit almost any organization’s needs. Understanding the buyer’s strengths and weaknesses, in addition to their strategic goals and objectives, is critical for successfully evaluating a target for acquisition. A holistic approach using balanced analytical methods will allow your deal origination effort to find quality targets that will further your corporate development objectives.

In order to establish the most successful framework for evaluating potential acquisitions, a thorough review of existing models must be performed. Because many of these models have been developed over decades by experienced practitioners within their respective industries, it is important not only to identify which model would best fit your needs but also how it can be tailored towards those needs.

The Market

Understanding the market opportunity and its conditions is critical to crafting an effective deal origination strategy. To begin, you should ask yourself:

• What is the market opportunity?

• What are the market conditions?

• What are the market trends?

• What is the competition?

• Who are our buyers, and where are they in their buyer’s journey?

The answers to these questions will help you understand how to position your company as a solution for potential buyers.

Your Company

Before you begin to sell your company, you should be confident in the strength of your product or service. This can be done through market research and an understanding of how your product or service stands out against competitors. You should also know the strengths and weaknesses of your industry within which you operate. You’ll want to develop a strategy for growth and determine what resources are needed to achieve those goals.

Strategy

Whether you're a seasoned investor or just starting to dip your toes into the world of deal making, you need to understand the basics of strategy.

When you think about strategy, it helps to keep in mind that it's not a final plan for achieving your goal; rather, it's a plan for making choices along the way. The best strategies are flexible enough that they can adapt as circumstances change—and they may even be able to prove themselves wrong and discard bad ideas while continuing on with better ones.

Strategy isn't only useful in corporate development and investment. In fact, all professions require some sort of strategic thinking: salespeople have to figure out who their customers are and how best to reach them; marketers must decide what kind of message will resonate most with their audience; managers must determine which projects should get priority over others based on their goals for the company overall.

Identification And Prioritization Of Targets

Once you've identified the right target, how do you negotiate a good deal? And what are some of the key considerations when deciding which target to pursue?

The target selection process is both an art and a science. It involves many factors, including:

• The need for your business to grow and expand its footprint into new geographic regions or markets.

• The size of your existing customer base in each geographic region or market that may be interested in your products and services.

• The likelihood that competitors will enter these same markets or regions at some point in time (if they haven't already).

Approach And Initial Contact

Make sure that you are talking to the right person, and not just someone who is passing through.

If a target has multiple employees, get their names first, and then look them up on LinkedIn. If they don’t have a LinkedIn profile, use Google or another search engine to find them on other social media platforms (Twitter, Facebook, etc.). You should do this as soon as possible so that they have time to check their inboxes before your call comes through.

Identify one or two core executives at each company with whom you will be able to establish rapport quickly and begin a dialogue about potential synergies between your two organizations. These executives may include founders or CEOs depending on the nature of your target company and what stage in its development cycle it happens to be at when you are initiating contact with them (e.g., early-stage startup versus later-stage startup).

Identify The Right Targets, Reach Out, Negotiate A Good Deal And Make Sure It Fits With Your Strategy.

• Identify the right targets

• Reach out, negotiate a good deal and make sure it fits with your strategy

• The deal origination process is a critical component of any corporate development group

Conclusion

With the right approach and tools, you’ll be able to identify the right deal origination strategy for your organization. By leveraging a comprehensive understanding of your company’s strengths and weaknesses as well as its strategic goals and objectives, you can create an effective acquisition process that will help drive growth.

4 Deal Sourcing Trends Shaping 2023

The coming year is unlikely to see a marked departure from the deal sourcing tactics of 2022.

Instead, private equity business development professionals and other industry participants point to trends that they expect to gain greater traction in 2023, including creative approaches to marketing, new technology applications, increased enthusiasm for smaller deals and an earlier start to relationship-building.

Technology is a must-have in dealmaking, but when it comes to deal sourcing tech, not all acquirers find themselves in the same place on the adoption curve. In a shifting M&A landscape, corporates and financial investors may have significantly different tech adoption experiences in 2023.

Nevin Raj, chief operating officer and co-founder of private company intelligence engine Grata, says a growing disparity between corporates and PE firms may lead to one of the most poignant trends in tech adoption next year.

“What we see is that (PE) investors, especially early-stage tech investors, tend to be some of the first adopters of technology,” notes Raj. As a result, those investors tend to embrace technology within their deal sourcing workflows, too. In contrast, corporates are “actually the furthest behind” in the adoption curve, he adds.

The case for buying a new growth engine

As they face macroeconomic uncertainty in their industries, most business leaders acknowledge that it’s more vital than ever to develop and accelerate an alternative engine of growth for the future. We refer to these new businesses within existing companies that use the scale benefits of the core business to grow faster than an independent startup could as “Engine 2.” And downturns are the times when companies make the bold moves that enable them to emerge stronger than their competitors.

While it can be tempting to build a new business from the ground up, our new research strongly supports the case for buying. We looked at hundreds of Engine 2 businesses over the past 25 years, and of the 58 most successful, 40 used mergers and acquisitions (M&A) as a significant part of their scaling plans. It’s an important finding at a time when lower valuations and less competition for deals make it a buyer’s market.

How do I start a corporate development function in my company?

Starting a corporate development function in a company can be a complex and multifaceted process that involves several key steps. Here is a general overview of the steps you might take:

1. Define the purpose and goals of the corporate development function: Before you start building the function, it's important to clearly define the purpose and goals of the function, and how it will contribute to the overall strategy and objectives of the company. This will help you to determine the key activities and responsibilities that will be required of the function.

2. Establish a dedicated team: To start a corporate development function, you will need to establish a dedicated team with the necessary skills and experience to carry out the function's activities. This team may consist of in-house employees, as well as external consultants and advisors.

3. Develop a strategic plan: Once you have a clear understanding of the purpose and goals of the corporate development function, and have established a dedicated team, you can begin to develop a strategic plan that outlines the specific activities and initiatives that will be undertaken to achieve the function's goals.

Implement the strategic plan: Once the strategic plan is in place, you can begin to implement the specific activities and initiatives that have been identified, such as identifying potential acquisition targets, conducting due diligence, and negotiating deals.

1. Continuously monitor and evaluate performance: Corporate development function performance should be continuously evaluated, by monitoring key performance indicators (KPI) such as deal completion rate, time to completion, deal size, and return on investment. This will help to identify areas for improvement, and allow for the ongoing development and evolution of the function.

2. Ensure alignment with overall company strategy: The corporate development function should be aligned with the overall company strategy, and all decisions should be taken in the context of the overall company goals and objectives. This will ensure that the corporate development function is adding value to the company and helping to achieve its strategic objectives.

It's important to note that building a corporate development function can be a significant undertaking, and may require significant resources and time. However, with a clear plan and the right team in place, it can be a powerful tool that helps companies achieve their strategic objectives and grow their businesses.

M&A Broker Bill Signed Into Law

On Friday, December 23rd, President Biden signed HR 2617. the Consolidated Appropriation Bill for FY 2023, into law.

Among its many provisions was Division AA, Title V, The Small Business Mergers, Acquisitions, Sales & Brokerage Simplification Act of 2021.

This settles the issue with respect to federal securities law; the task remains to get all fifty states, to adopt the NASAA Model State Rule, which now closely follows the new federal law. This will be an individual effort state by state, most likely lead by the respective state or regional associations. However, it should be a whole lot easier with the passage of this amendment to federal law. As you undertake this in your own state, feel free to contact me or Attorney Shane Hansen as we have some experience with individual states on how to get this done.

How long does it take to acquire a business?

The timeline for acquiring a business can vary depending on a number of factors, including the size and complexity of the business, the level of due diligence required, and the negotiation process. Generally, the process can take several months to complete, although it can take longer for larger and more complex deals.

Typically, the process of acquiring a business can be broken down into several stages, which include:

1. Identification and screening of potential targets: This can take anywhere from a few weeks to several months, depending on the size and complexity of the business, as well as the level of research and analysis required.

2. Initial approach and negotiations: Once a potential target has been identified, the acquiring company will typically initiate contact and begin negotiations. This stage can take anywhere from a few weeks to several months, depending on the complexity of the deal and the level of agreement between the parties.

3. Due diligence: This is the process of evaluating the financial, legal, and operational aspects of the business being acquired. This stage can take several weeks to several months, depending on the size and complexity of the business, and may involve the engagement of legal and financial advisors to assist with the process.

4. Closing: This is the final stage of the process, during which the parties finalize the terms of the deal and complete the legal and regulatory requirements for closing the deal. This stage can take anywhere from a few days to several weeks, depending on the complexity of the deal.

It's worth to mention that the whole process may take even longer in case of any legal or regulatory hurdles, disputes or any other unforeseen events that may delay the completion of the deal.

Why Investors Love the Lower Middle Market

In a world where investors want to make money, it's easy to see why they love the lower middle market. Here are some of the reasons why:

1. The lower middle market is less volatile than other markets

2. They have a strong history of growth and stability

3. They have a long track record of paying back loans in full and on time

4. They have a higher rate of return than most other investments

Investors love the lower middle market because it's a great opportunity to diversify their portfolios, and many of them see this as a chance to make a positive impact in the world.

From an investor's perspective, the lower middle market is often overlooked because of its size. But this can be a huge advantage for investors who are looking for opportunities where they can get involved on a personal level. There are plenty of opportunities for investors to connect with people in this market, which helps them feel like they're making a difference through their investments.

The lower middle market offers the best of both worlds: the opportunity to grow, and a relatively low-risk entry point.

Investors love the lower middle market because it gives them access to big opportunities without requiring as much capital. Lower middle-market companies have high growth potential, but they aren't nearly as large or well known as their upper-middle market counterparts. So there's less risk involved in investing in them—you can see real growth and get real gains, but you don't have to commit a ton of money or time to do it.

In addition, the lower middle market has been expanding rapidly over the past few years, which means that investors who invest early are likely to see even bigger returns later on down the line. Companies in this category tend to be younger than those in other tiers, so they have more room for growth than more established businesses do. In addition, because these companies are newer, they often have less debt load than other types of businesses might have at similar levels of revenue.

Finally, there are many different types of investors who are interested in putting money into companies like these—all sorts of people with different backgrounds and expertise can participate in this type of investment strategy!

Why Due Diligence is Critical in the Reshaping of Global Supply Chains

Dealmaking is back on the table for private equity firms focused on Asia. After the biggest global health emergency in more than a century put an almost complete stop to in-person site visits and meetings, executives are once again seeking opportunities where they can see potential for transformation and profitable disposal in the future.

According to research from McKinsey, the global economic recovery from Covid has rapidly increased the demand for logistics and distribution services, which has far outstripped supply. This has caused PE behavior to shift. Its due diligence of prospective investments has increasingly focused on companies that rely on supply chain resilience.

Getting products from design and manufacturing and into markets along secure distribution routes will always be a key requirement for companies no matter what economic and geopolitical storms they may have to adjust to. This focus on distribution is heightening the interest in deals for companies that make supply chains work.

The Deloitte View On M&A Prospects In 2023

M&A transaction activity in 2022 wasn’t quite on par with 2021 but was still remarkably buoyant, according to Deloitte M&A partners Jan Fitzell and Anya Cummins.

The 2021 M&A market was the most active M&A market in terms of deal volume since 2006. 2022 has remained exceptionally busy and even as compared to a record prior year and against the backdrop of Russia’s invasion of Ukraine, rising inflation and energy costs and significant economic uncertainty, 2022 will still be one of the busiest years on record for M&A.

We have seen the continued growth of private equity as acquirers of businesses in Ireland, together with international trade acquirers who have come through the Covid-19 period with strong balance sheets and a desire to grow into new markets.

While the market has cooled somewhat as compared to 2021, we are still seeing very strong levels of deal activity and appetite from buyers and investors remains very strong.

The second half of 2022 has seen a few more uncertainties as interest rates started to increase and inflation impacted on costs. However we are still seeing the quality businesses being competed for strongly, with financial services, TMT, energy and life sciences all particularly active sectors.

What is M&A Deal Origination?

Mergers and acquisitions (M&A) deal origination refers to the process of identifying, evaluating, and initiating potential M&A opportunities. This process typically involves identifying target companies or assets, performing due diligence to assess their value and potential fit with the acquiring company, negotiating the terms of the deal, and ultimately completing the transaction.

There are various ways in which M&A deal origination can occur. For example, a company may proactively seek out potential acquisition targets through market research, networking, and strategic planning. Alternatively, a company may receive unsolicited offers from other firms looking to acquire it or its assets.

There are several key considerations that are typically taken into account during M&A deal origination, including the financial and strategic fit of the target company or asset with the acquiring company, the potential impact on shareholders and stakeholders, and the potential risks and opportunities involved in the transaction.

M&A deal origination is typically led by a company's corporate development or M&A team, which may work closely with legal, financial, and other advisors to evaluate and pursue potential opportunities.

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ways to originate M&A deals

There are a number of ways to originate M&A deals, including:

1. Internal sourcing: This involves identifying potential M&A opportunities within a company's own industry or market.

2. External sourcing: This involves looking outside of a company's own industry or market for potential M&A opportunities. This can involve working with investment banks or other financial advisors to identify potential targets or buyers.

3. Networking: This involves building relationships and connecting with potential M&A partners through industry events, conferences, or personal connections.

4. Cold outreach: This involves reaching out to potential M&A partners without any prior relationship or introduction. This can be done through direct mail or email campaigns, or through targeted advertising efforts.

Once potential M&A opportunities have been identified, the process of evaluating and negotiating the deal can begin. This can involve due diligence, financial analysis, and negotiations around terms and conditions.

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methods and approaches to identify potential M&A targets

There are a variety of methods and approaches that companies may use to identify potential M&A targets. These may include:

1. Industry research: Researching industry trends, market conditions, and potential acquisition targets within a specific industry or sector.

2. Networking: Identifying potential acquisition targets through connections and relationships within the industry or through industry events and conferences.

3. Strategic fit analysis: Analyzing potential acquisition targets to determine how well they align with the acquiring company's strategic objectives and business model.

4. Financial analysis: Evaluating the financial performance and potential of potential acquisition targets.

Once potential acquisition targets have been identified, companies may initiate contact through a variety of methods, including direct outreach, letters of intent, or the engagement of financial advisors or investment banks to facilitate the process.

It is important for companies to carefully consider the potential risks and benefits of any M&A deal and to conduct thorough due diligence on potential acquisition targets before proceeding with a deal.