WCF Advisors Blog

Deal Activity Continues to Be Robust — When Will the Slow-Down Hit?

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Mar 29, 2019
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Market Updates
Several things have driven deal flow and valuations for the last several years — namely, demographics, available capital, a favorable lending environment and generally favorable economic conditions. The low unemployment rate is also cited by the Market Pulse Fourth Quarter 2018 report as fueling high demand by buyers. However, many sources are forecasting a slowdown in the future. The question continues to be not if, but when the slowdown will occur. Market Pulse reports 83% of the...

The Clock is Ticking

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Jan 01, 2019
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Market Updates
There is continued evidence multiples have plateaued. For the third quarter of 2018, valuations averaged 7.3x EBITDA, which is a reduction from the second quarter 2018 average multiple of 7.4x and the peak multiple of 8.0x achieved in the fourth quarter of 2017. "The M&A market is driven by corporate performance, availability of debt and general economic strength." On a positive note, deal activity increased over Q2 and reversed a downward trend from the Q4 2017 peak. During the third...

Contrary to Market Feel, Deal Numbers Are Down, But Deal Dollars Are Up

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Sep 28, 2018
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Market Updates
Valuations for the quarter averaged 7.4 times adjusted EBITDA, though well above the first quarter of 2018, but below the third and fourth quarters of 2017. Many believe this is due to facts and circumstances concerning the transactions and not the trend of the market. The 47 completed deals in the GF Data® cohort represent a drop from 63 in the first quarter and 57 in the year-ago second quarter. Those reports seemed at odds with our impressions of the market and others in the industry. For...

Abundant Debt and Robust Valuations Characterize First Quarter

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Jun 27, 2018
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Market Updates
With a strong 2017 in the rearview mirror, mergers and acquisitions (M&A) activity in the first quarter continued last year’s themes of high valuations and strong use of debt. According to GF Data®, middle-market deal valuations and use of debt remain robust, with an average TEV/EBITDA multiple of 6.9x and an average Debt/EBITDA multiple of 4.2x. In addition, middle-market companies are reporting the highest rate of revenue and employment growth since one year ago, and confidence...

Looking Back, Looking Forward, Looking Up!

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Mar 12, 2018
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Market Updates
M&A activity finished strong in 2017, despite some deals choosing a January close for tax purposes, which potentially underinflates the 2017 volume and buoys January 2018 volume. Factset reports a total 2017 deal volume of 11,673 deals worth $1.7 trillion. January deal volume increased, totaling 910 deals versus 819 in December. Valuations remain strong in the middle market, with GF Data® reporting an “eye-popping continued surge in valuations in the fourth quarter” from its...

Let the Good Times Roll

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Jan 11, 2018
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Market Updates
  To say the third quarter was strong would be an understatement. With valuations and leverage levels at nearly all-time highs, it is clearly a seller’s market in the middle and lower-middle markets. In fact, according to Pitchbook, valuations reached their highest level on record during the quarter. These observations beg the question, “What’s driving the markets, and how long will it last?”As everyone knows, financial and economic markets are cyclical. So the...

How to Monetize Your Business Without a Complete Sale

Nov 08, 2017
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Market Insights
Most business owners understand that an exit strategy should include maximizing their return on investment (ROI). Traditionally, business owners sought out two strategies to do this: Developing a dividend stream (annual cash flow) that pays increasing amounts each year as the business grows Selling 100% of the business and reaping the capital gains However, more and more middle market companies are choosing a recapitalization path as a means to distribute cash to their owners without an...

What’s Your Company Worth? An Introduction to Advanced Planning for Business Owners

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Oct 05, 2017
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Market Insights
For many owners of closely held businesses, their business is their retirement plan — understandably, saving for retirement can often take a backseat to investing more capital in the business, and the proverbial retirement-planning can gets kicked further down the road. Though an eventual sale of their business interest may provide a windfall large enough for long-term financial security, it’s still essential for business owners to understand the value of their company, now and in...

Strategic Buyers Pay up for Opportunities

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Sep 21, 2017
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Market Updates
The M&A market is somewhat a tale of two markets, large and small. While the middle market ($50M to $500M in deal value) has remained relatively stable, mega deals ($500M in deal value and above) have dominated in terms of volume and value. The number and value of mega deals have increased year over year in 2017, while middle market deals have trended slightly behind and lower middle market deals have declined. Similar to what we reported last quarter, total deal volume in the United States...

Crowdfunding for Capital? Know the Rules.

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Aug 25, 2017
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Market Insights
Consider the traditional approach to securing business financing: Armed with your valuable idea, a sound business plan, and some marketing research, you strive to get an audience with some wealthy investors, perhaps angel funds, a venture capital firm, and a few investment banks. You spend a great deal of time and effort pitching to this very limited pool of capital investors, with uncertain success.  Now consider a current popular approach called crowdfunding: You pitch your valuable idea...

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