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Michael
Poole
PCE Investment Banking |
Florida Dealmaking: Trends
& Deals
An Acquisition Friendly
Environment
October 7, 2003
Opportunity
knocks, but doesn’t always answer to its name.
Mason Cooley
As our national economy struggles to regain its stride, it has created
an environment that is fortuitous for some and perilous for others.
Just like public companies, private company values have fallen.
This condition can be observed to differing degrees across various
industries. There is excess capacity in certain industries resulting
in under utilized assets and consequently lower earnings. This has
created excellent opportunities for healthy companies to expand
through consolidation.
LOW VALUATIONS = OPPORTUNITY. Many companies are trimming down
to core competencies. As such, they are divesting of marginally
performing assets and operating units. In some industries, the economic
downturn has created financial stress on thinly capitalized companies.
These under capitalized companies cannot cover variable costs due
to low demand or the interest cost on debt. In such instances, assets
are being acquired at or below intrinsic value resulting in limited
or no goodwill. Acquiring these businesses at low valuations creates
a cushion or greater margin of error if operations fall short of
projections.
HEALTHY CAPITAL MARKET. Now is the time for healthy companies to
become buyers. Market forces are converging to create opportunities
in various industries to purchase solid performing assets at reasonable
multiples while the capital markets have liquidity to execute the
transactions. For many companies, this is an infrequent or one-time-only
prospect, and owners should consider seeking experienced professionals
to assist in the process.
Let us help you or your client evaluate the opportunity of growing
through the purchase of a business.
PCE
Investment Bankers is a member of the PCE family of companies that
provide investment banking, valuations, advisory services, research
and Indexes.
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