Now Is a Good Time to Buy or Sell a Middle-Market Company


Many strategic buyers who have been cautious over the last five years are now looking for the right company to complement their growth strategy. “M&A fundamentals are as sound as I’ve ever seen them,” says Joseph Durnford, managing director of J.D. Ford. “There is a large pool of potential middle-market targets. More capital is available for dealmaking than at any time in recent history.”

Private equity firms, he says, have the ability to raise almost unlimited amounts of capital and must deploy that capital to fuel their success. Although private equity multiples are generally lower than those paid by strategic buyers,  the number of private equity funds and assets under management continues to grow, with roughly $1.1 trillion in equity available.

Buyers are willing to pay higher multiples for companies with larger cash flow and a strong brand/market presence.

PE deals for U.S.-based companies are at a record high right now of 11.5x due to available and cheap debt, but the pace of deal making is slowing due to high valuations, with private equity frequently outbidding strategic buyers, according to Jeffrey Sasakura, senior vice president of JDF.

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