WCF Advisors Blog

Category: Market Updates

Pandemic brings slowdown and uncertainty for 2020; rebound coming into view

Jun 22, 2020
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Market Updates
After another strong year of M&A activity in 2019, the first quarter of 2020 began in a similar fashion but ended with feelings of uncertainty, at best, and fear, at worst. Although the landscape has continued to evolve over the last two months, it is important to understand where things stood pre-COVID-19 and use these baselines to make informed decisions in the months ahead. M&A deal activity The COVID-19 coronavirus backdrop led to a sudden shift in the underlying macro dynamics...

M&A deal activity falls, but sellers still have options

May 06, 2020
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Market Updates
Our last newsletter started off, “Let the good times roll” as we finished off a strong calendar 2019 and looked forward to 2020. Well, that sentiment was most certainly shattered and in a much shorter time frame than anticipated. However, we remain bullish on M&A on the whole and offer a few words of wisdom on current and anticipated near-term trends. M&A deal activity FactSet reports that total U.S. M&A deal activity dropped 18.8% in March 2020, with 862 announcements...

Favorable conditions for 2019, wavering optimism for 2020

Dec 11, 2019
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Market Updates
Let the good times roll! As year-end rapidly approaches, M&A activity remains strong through the remainder of 2019. GF Data reported that valuations for transactions closed averaged 7.4x EBITDA for the second straight quarter, buoyed by larger deals in the $100M to $250M enterprise value range. For the year-to-date 2019, the average EBITDA multiple for all deals also remained consistent with last year at 7.2x. Multiples in all deal size categories except one rose in 2019 over 2018. With a...

The Seventh Inning Stretch (Extra Innings, Anyone?)

Sep 30, 2019
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Market Updates
With the third quarter wrapping up, the M&A markets continue to show more strength than weakness. Are we in the seventh inning stretch, and are there extra innings to look forward to? To fully analyze the current state of affairs, we must look to secular dynamics and their impact on valuations. Even in those sectors, which are off of their all-time highs, with a longer term perspective, valuations remain strong. Several externalities — tariffs, trade wars, interest rates and the...

Will the First Quarter Sluggishness Become a 2019 Trend?

Jul 10, 2019
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Market Updates
After another record-setting year in 2018, mergers and acquisition activity slowed during the first quarter of 2019. However, the slowdown in completed deals between the fourth quarter of 2018 and the first quarter of 2019 was in line with historical declines observed during first quarters of the past several years. Private equity transaction volumes involving deals between $10 million and $250 million fell by 9.5% on a quarter-over-quarter basis, according to GF Data®. Multiples, however,...

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

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

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

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

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!

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...