Merger and acquisition action in 2016 could end up at about the same strong level as a year earlier as solid market conditions continue to make M&A sense.
That’s the view of Rick Weil, Managing Director – Investment Banking for Mesirow Financial. He spoke at FPA’s Fall Executive Conference in October. Weil sees three conditions driving the market.
First, market conditions for M&As are as strong today as they were five years ago. He says that companies are showing solid financial performance, there is an abundance of capital, and there are a lot of synergies.
Second, the changing world with its uncertainties fosters M&A activity. “It is challenging and frustrating,” Weil says, noting that the opportunities remain robust in the face of sometimes difficult global backgrounds.
Third, Weil says, “Bids for companies — big and small — remain very hot.”
As an example of the market’s strength, Weil showed data on average EBITDA multiples for packaging M&A activities. In coming out of the recession, the price multiple in 2011 was 6.9 times EBITDA. The 2015 figure was 7.7 times; the 2016 ratio has been 8.3 times to date.
Among reasons for the rising values, Weil says, is the stability of the packaging market.
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To see the presentation slides, FPA members can go to www.flexpack.org and click “Download Presentations from the FPA Fall Executive Conference.”