CGK Investment Banking has changed its name to CGK M&A Advisors to help better identify CGK as a provider of merger & acquisition advisory services to privately held, middle market companies around the world. As dedicated M&A professionals, CGK specializes in helping clients buy and sell companies.
We saw an increase of 11% in 2010 in M&A transactions over 2009, primarily driven by the appetite of private equity firms (PE firms). Private equity continues to increase buying while Companies (aka synergistic or strategic buyers) continue to hoard cash. At the end of 2010, private equity was sitting on $485 billion of capital to invest. As recently as the end of 2007 this number was $200 billion. The major difference between PE firms and Companies, is that PE firms focus on investing in acquisitions. We look for continued interest from PE firms in 2011.
Most M&A transactions in 2010 were in healthcare/life sciences, manufacturing and distribution, financial services and technology sectors. The forecast for 2011 indicates more transactions targeting manufacturing and distribution than any other segment.
We expect to see lending increase throughout 2011. Banks maximum leverage is still hovering around 2 to 2.5 times EBITDA with some banks lending beyond a company’s asset base; up to 0.5 times EBITDA. Banks are slow to return to cash flow lending.
The forecast is for continued increase in the number of transactions in 2011 as credit loosens and additional capital flows into acquisitions.