With what it sees as “a sense of stability returning to the economy and to corporate boardrooms,” the “RBS Citizens Middle Market M&A Outlook 2014” recently released showed middle-market companies remain open to buying or selling, but are prioritizing to re-invest in existing operations.
RBS Americas headquarters is on Washington Boulevard in Stamford.
“Our latest survey indicates that the appetite for acquisitions and sales remains strong, but businesses are taking a more strategic, less urgent approach, which reflects a strengthening economy,” said Bob Rubino, executive vice president and head of corporate banking and capital markets for RBS Citizens. “As more middle market companies see top-line growth, owners are looking for strategic sales or acquisitions that can augment their re-investment strategy and help keep their momentum going.”
Key findings from this year”™s survey include:
∙ Sellers are more interested in selling part of their business than the whole.
∙ Interest in raising capital remains steady, but companies are less likely to take on debt and are more likely to accumulate earnings, sell a business unit or divest assets to make investments.
∙ Executives believe both this year and next will be a “buyer”™s market.”
∙ Nine of 10 survey respondents intend to engage a “friend in the deal” ”“ an outside partner ”“ to provide guidance throughout the M&A process; half of all buyers and 40 percent of sellers are considering partnering with a commercial bank.
For the purposes of this survey, middle market businesses featured annual revenues of $5 million-$2 billion.
This is the third merger-and-acquisition’s outlook RBS has conducted; 460 businesses were surveyed. The company called it “an in-depth look into the behaviors, attitudes and perceptions of executives about their corporate development strategies for the year ahead.”
Based on this year”™s results, the proportion of current and potential sellers in the market remains unchanged since 2012, but their motivations and intentions have shifted.
∙ Although just 6 percent of middle-market executives are currently involved in a sale, more than one-third indicate they would be open to a deal if approached by a buyer with a strategic fit.
∙ While sellers were willing to “sell it all” a year ago, a partial sale ”“ selling an operating asset or division ”“ has become more appealing than selling off the entire organization.
∙ Being undervalued and underpaid by acquiring firms remains sellers”™ primary concern; partial sellers are increasingly concerned about meeting post-acquisition revenue targets.
Look for complete survey coverage that includes the buyers’ and advisers’ perspectives in the Feb. 24 Fairfield County Business Journal.
