One of the most reliable indicators of future M&A activity (which is typically measured in deal announcements and/or deal closings by most research groups) is the current level of deal launches in the market. Obviously for confidentiality reasons, M&A firms like Generational Equity don’t announce publically when they initiate an engagement. You can imagine the confidentiality issues that would cause.
However, independent sources who manage virtual data rooms – electronic rooms where deal makers store confidential data for buyers to review – have been gathering generic research for years on deal activity. In the past this was all done manually in conference rooms where folks would be sequestered for days on end reviewing documents. Now it is done electronically.
One of the leaders in virtual data room (VDR) management for years has been Intralinks. Intralinks has been the leading global provider of VDRs for more than 16 years, and their involvement in the early stages of a significant percentage of the world’s M&A deals allows them to keep a finger on the pulse of today’s rapidly changing M&A market. In fact, a few years ago they began publishing their research findings and calling their data the Deal Flow Predictor (DFP).
Over the years the DFP has been compared to actual deal announcements/closings and Intralinks' findings have been proven to be extremely reliable in predicting future M&A activity. This is how they describe the DFP:
"The Intralinks DFP has been independently verified as an accurate predictor of future changes in the number of announced global M&A transactions, with quarter-on-quarter (QoQ) percentage changes in the Intralinks DFP typically being reflected six months later in announced deal volumes, as reported by Thomson Reuters."
So we look at their data as a good indicator of what to expect to see in M&A activity a few months down the road. They recently published their DFP for the first quarter of 2015 and here is a summary of their predictions based on VDR activity:
So again, based on their historic and authenticated DFP predictions, 2015 will most likely be a continuation of our current sellers market, especially in the U.S.:
"This is the best U.S. mergers and acquisitions environment since 2006-07. We are seeing bullish activity across most market sectors, and the U.S. is on track to hit pre-recession levels of dealmaking in 2015."
Now the DFP can be seen as implying several things:
By the way, the Generational Equity VDR activity mirrors the Intralinks DFP. Our deal teams are busier so far this year in terms of deal launches than they have been in years. Traditionally January is a slower month for our deal teams, as there usually is a huge push in December to complete deals before year-end due to tax reasons. The end of 2014 was busy, but this year there was no slow down in January at all. In fact, the number of clients we have under dual signed letters of intent (a pretty good indication that a deal will close) is up more than 40% at this point in 2015 compared to last year. So our own DFP is predicting another great year for M&A activity.
If you would like to learn more about current trends in M&A and how you could benefit from this market, attending a Generational Equity exit planning seminar would be a good idea. While there you will be able to meet one-on-one with one of our M&A professionals who will be able to discuss your company and steps you might need to take to prepare your business for buyer interest.
Special thanks once again to Interlinks for providing their insight into expected M&A trends. As always, we look forward to the DFP coming true.
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
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.
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
Dear Chris and Andre, I just wanted to say thanks for all your help. Even though this process was not an easy one, it was comforting to know that I had a capable team standing beside me. You made me feel like we were almost your only client or at least the most important one. Thanks again, and I will recommend your service in the future.Shenille Engelhart, Owner – CLS Technology
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
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.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.
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
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
I am pleased that I was able to work with Andrew Byrd throughout this experience. From the first meeting we had in Minneapolis I felt that I was in good hands. His knowledge and expertise is second to none. He guided the process consistently throughout. I feel lucky that I was pared with Andrew and could not be happier that I chose Generational Equity to handle this major life event. Thank you Andrew and GenEq for everything!Eric Erlandson, Owner, Action Fastenings, 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
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
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
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
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 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
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
T.D., thank you so much! You are a great leader! I love how you are using your gifts and talents to better others. You are clearly a GREAT COACH! This 3 day session undoubtedly changed the future of our business, and very well may have been the sole catalyst to save my company, my health and my marriage! A genuine “thank you” from the bottom of my heart.Bryan D. Horn, Owner, Over Under Clothing
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
I need to say an immense thank you to Don Ho for his stellar work ethic, attention to detail, and tireless effort. Also thank you to the whole crew at GE! Without you, Don could not do such a phenomenal job. We were shooting for closing and funding before the end of 2020, due to the uncertainty of the political landscape and taxes. I am happy to report we closed last week and will be funding tomorrow.Dr. Caty J. Catron PhD, RN, VA-BC – Owner, Vic The Picc, LLC
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 quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
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
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
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
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.
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