Size Differences within the Lower Middle Market

In addition to the industry breakdowns, GF Data segregates the universe of observed transactions by size. As expected, within the lower middle market universe, valuation multiples are positively related to size.

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Trump and the economy: How fast is enough?

Andy Greenberg’s comments on Trump ‘s impact on middle-market deal activity.
by Joseph N. DiStefano, Staff Writer, The Philadelphia Inquirer.

President-elect Trump told voters that things aren’t going as well as they should be and he can make it better.

Now’s his chance. Trump is building his team with a lot of business people who hope trimming tax, pollution, labor and trade rules will mean more profitable energy, real estate and export deals.

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M&A Glide Path Continues

by John McNulty,

Middle-market M&A activity in the third quarter seemed to settle further into the glide path GF Data® has observed over the past couple of years – steady but not overpowering completed deal volume, record valuations and unwavering debt support – according to the data tracking firm’s November report.

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The Age of the B+ Seller

By Andy Greenberg, CEO GF Data……

It’s been about a year since I wrote a commentary expanding on the analysis contained in the GF Data quarterly reports. The hiatus brings to mind Albert Einstein’s supposed explanation for why he did not speak until the age of four: “Until now everything was fine.”

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Not So Quiet on the Western Front

by Andy Greenberg, CEO GF Data and
B. Graeme Frazier, IV, GF Data’s Co-Founder and Principal. published PEP Digest

Within the GF Data universe of middle-market deal sponsors, the slowdown in M&A activity has been neither as deep nor as prolonged as general industry reports would suggest, according to the deal tracking firm’s second-quarter report.

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The First Quarter Lull: Tacking, Not Veering

by Andy Greenberg, CEO GF Data and
B. Graeme Frazier, IV, GF Data’s Co-Founder and Principal. published PEP Digest

Completed deal activity in the GF Data private equity universe was light by any measure in the first quarter of 2016, according to the data tracking firm’s May 2016 report.

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Indemnification of reps and warranties continues downward trend GF Data® $10-250mm PE transactions

GF Data’s semi-annual view of trends in key deal terms other than price – indemnification cap, escrow/hold back and basket shows that the “seller’s market” conditions driving valuations continue to affect key deal terms as well.

  • The average cap on indemnification of reps and warranties for 2015 was 14.9 percent of TEV in the year to date – continuing the general downward trend of the last five years.
  • Average escrow/holdback in 2015 was 6.6 percent of TEV. This number has been remarkably stable, averaging between six and seven percent for the past five years.
  • Indemnification caps on deals with earnouts versus deals without earnouts showed a pronounced drop 2015 versus 2014.
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Valuations Soared in 2015, Making it Tough for PE Firms to Compete with Strategic Buyers

Prices paid for lower middle-market targets averaged 9.1 times Ebitda, up from 7.8 in 2014, says GF Data’s Graeme Frazier.

Soaring valuations in today’s frothy M&A environment have made it difficult for the average private equity firm to win deals. Even when a private equity firm is able to buy a company, the margin to create value is thin, due to the high price paid to acquire the company in the first place. According to S&P Capital IQ’s LCD unit, U.S. buyout firms paid an average of 10.3 times Ebitda for their purchases in 2015. That’s surpasses the 9.7 times Ebtida seen in 2007.

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Mid-Market Deals Maintain High Valuations as Deal Pace Slows

Deborah L. Cohen |
GF Data Report Calls Activity ‘More of the Same’

Midsize companies commanded higher valuations in the third quarter, though the number of deals was down, according to GF Data Resources, a research firm that tracks the middle market.

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Calling the Crest, Continued

By Andrew Greenberg, CEO GF Data –

The “Calling the Crest” article published a few weeks ago generated a wide response. Most of GF Data’s correspondents seemed to agree with the thesis that it may be early to say this “seller’s market” has crested, but that a tightening in the debt markets will be the most likely cause of a correction when it comes.

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