For a number of years now SS&C Intralinks, a leading provider of secure data rooms for investment banks, has created a research tool updated quarterly called the Intralinks Deal Flow Predictor (DFP).
The information they track is based on what they are seeing in terms of data rooms being opened by M&A advisors, both on their site and other data room providers sites (see note below for details). Data rooms are a leading indicator of M&A activity out 3-6 months since M&A advisors use these rooms to store confidential information for buyers to review on their clients.
You may be surprised to learn that Intralinks is actually predicting an increase in transactions in North America through the end of the fourth quarter:
In North America we forecast the number of announced M&A deals to increase by around +6 percent YOY in Q4 2020, within a range of +16 percent to -4 percent. The U.S. recovery arch for the tail end of Q2 and early Q3 is promising in our view.
We concur with this assessment based on the record summer we had in terms of deals closed (in August we closed more deals than any month in the history of our company) and the fact that our NDA requests are up dramatically in 2020 over 2019. An NDA (non-disclosure agreement) is what we require potential buyers to sign prior to us sending any confidential information. It is an additional leading indicator of potential M&A activity.
Another piece of data that I found amazing in the Intralinks analysis was that, despite our economic challenges, deal valuation metrics have stayed stable (or in some cases actually increased in 2020):
(Source: SS&C Intralinks)
As you can see, through the first six months of this year, two key measures of deal valuation (Equity/EBITDA and Enterprise Value/EBITDA) have actually improved this year.
Again, this news may surprise you. But it does not surprise us. We have decades and decades of collective experience working for our clients to get them optimal deals no matter what economic cycle we may be in. The same is true right now.
Our track record speaks for itself and we are confident that the M&A resurgence we are seeing will continue for quite some time. No other M&A advisory firm that we are aware of has closed as many transactions as Generational over the past decade. In fact, in April of this year, we reached a major milestone with 900 closed transactions.
So, if you have put your exit plans on hold because of the assumption that this pandemic is causing buyers to retreat, you need to get your plans out and update them! Now is a great time to be in the market meeting with qualified professional buyers.
Our services are designed to help you do just that. To learn more about how we can help you, please call us at 972-232-1121 or visit our website, provide us with your contact information, and we will be in touch.
Intralinks DFP: The SS&C Intralinks Deal Flow Predictor provides Intralinks’ perspective on the level of early-stage M&A activity taking place worldwide during any given period. The statistics contained in this report reflect the volume of VDRs opened or proposed to be opened, through Intralinks and other providers for conducting due diligence on proposed transactions.
The prediction model has a very high level of statistical significance, with a more than 99.9 percent probability that the SS&C Intralinks Deal Flow Predictor is a statistically significant six-month predictive indicator of announced deal data, as subsequently reported by Refinitiv.
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.Andy Graham, Vice President, Modern Heating & Plumbing
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.Larry Moore, Owner, A Company Portable Restrooms
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.Michael J Polarek, President, Paragon Packaging
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.Robert Evans, President and CEO of Mealtracker Dietary Software
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.Michael J Polarek, President, Paragon Packaging
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.Terry D. Wickman, President, Keytroller
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Terry D. Wickman, President, Keytroller
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”Karen S. Williams, CFO, BW Manufacturing
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.Robert Evans, President and CEO of Mealtracker Dietary Software
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.Pete L.
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.Karen S. Williams, CFO, BW Manufacturing
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.Jay Dinnison, Owner of Sharpe Mixers
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!Andy Graham, Vice President, Modern Heating & Plumbing
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
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