Lower Middle Market Weekly Outlook

As you begin planning for 2015, Devin Mathews of ParkerGale thinks it is important for you to remember two things: the industry is hyper-competitive and sellers are getting smarter. These trends — both of which have been developing for a long time — are soon to create an “apocalypse” environment for non-adaptive PE firms.

One strategy to ensure your survival of this apocalypse is to specialize in a given sector or industry. Recent research from Cambridge Associates found, “Sector-focused funds have returned an aggregate 2.2x multiple on invested capital and a 23.2 percent gross internal rate of return between 2001 and 2010… That compares to the 1.9x multiple and 17.5 percent gross IRR returned by generalist funds during that time period.” For other strategies, stay tuned for Axial BD Week, starting December 1st when we’ll discuss the 5 core pillars of business development.

In other news, you should sell your business to an MBA and Paul Taubman has hired Don Cornwell to PJT Partners.

Transactions:

• Triangle Capital Corporation invests in TGaS Advisors
• Brookside Mezz backs Grey Mountain Partners’ recap of Fleetwood Industries
• Morgenthaler sells RotoMetrics to Sentinel Capital
• Pamplina acquires majority stake in Intralign
• Tonka Bay Equity Partners sells Checkers Industrial Safety Products
• Vista Equity Partners finishes NAVEX acquisition
• One Rock Capital Partners buys Airxcel
• Stone Point Capital picks up Oasis Outsourcing
• Arlington Capital sells Micron Technologies
• Anchorage Capital Partners to buy Volley Shoes
• Lincoln Electric acquires RealWeld Systems
• Peak Rock Capital affiliate to acquire Main Steel Polishing Company
• Emdeon to acquire Change Healthcare
• Top Knobs buys Atlas Homewares
• Providence Equity invests in VendorSafe
• Pacific Continental Corporation buys Capital Pacific Bancorp

Events:

• Thursday: Americans to eat their weight in turkey

Opinions:

• PE firms wrestle with investors as competitors
• Buyout firms disclose more fees
• Middle market retailers remain cautiously optimistic for holiday season
• The inner workings of a deal: Tips for a successful transaction
• What do recent mergers tell us about markets?
• The most admired corporate dealmakers of 2014
• DreamWorks-Hasbro deal is dead but expect more media M&A in the next year
• M&A surge means job cuts for in-house lawyers and accountants
• Private equity bets on energy ‘revolution’
• Bye-bye stock market: Companies going private in 2014
• Health care likely to continue M&A streak, but PE may not benefit
• Mega-mergers popular again on Wall Street
• Reviving Mideast private equity market draws international interest
• These three trends point to a bright future for investment banks
• Three prescriptions for successful health care mergers
• Frothy market puts pressure on private equity firms
• Firms look to ivory coast for deals

This week in history…Matsushita buys MCA for $6.5 billion (1990).