February 2011 Marketplace Update

Axial’s monthly activity report provides real-time analytics and transparency into lower middle market M&A activity.

Sell Side Marketplace Activity

We are pleased to report 58 new Member Advisory firms joined Axial in the last 90 days.  These new Members, which include M&A consultants, regional investment banks, boutique advisory firms, and qualified business brokers/finders, have already delivered and managed 192 opportunities through the Axial platform, totaling more than $1.4B in Revenue and $165M in EBITDA. In the last 90 days, 335 opportunities totaling more than $4.5B in Revenue and nearly $636M in EBITDA were delivered via Axial from 131 sellers.

Companies headquartered in the Midwest generated the largest volume of dealflow over the past 90 days, followed closely by companies headquartered on the West Coast and in the Southwest region of the US.

This chart displays the relative volume of opportunities taken to market by Axial Members over the past 90 days, segmented by industry, with over 21% of deal flow classified as opportunities within the Capital Goods sector, followed closely by Consumer Goods . 

This chart expresses the average level of interest per opportunity within each industry sector by displaying number of NDAs executed per deal – normalized. Opportunities in the Materials sector– which includes Chemicals, Metals, Packaging, Paper & Forest Products and Construction Products — saw the greatest amount of interest per opportunity on average, with Energy following in per unit activity. The purpose of this chart is to isolate the amount of buyer interest in a particular category independent of the number of deals that have come to market in that vertical, which otherwise influences the perceived activity in each space.

This chart displays the percentage of NDAs executed by industry by Axial Members over the past 90 days. Capital Goods — which encompasses Aerospace & Defense, Industrial Machinery, and Electrical Components & Equipment – saw the greatest amount of activity, with opportunities in this vertical accounting for over 20% of all buyer interest. In addition, Business Services and Energy both saw increasing cumulative interest, each individually accounting for nearly 15% of total indications of interest over the past 90 days.

Buyer Activity

We are pleased to report that 70 new Buyers joined Axial over the last 90 days, comprising 28 new Financial Buyers and 42 Strategic Buyers. The financial buyers include 16 private equity groups, eight private investment firms, two accredited investors, one hedge fund, and one family office collectively comprising over $7.5B in capital. 

The newly joined strategic buyers operate within the Business Services, Capital Goods, Consumer Goods & Services, Energy, Healthcare, Information Technology, and Materials industries. These buyers are focused on making acquisitions between $5M and $50M in revenues, and EBITDA in excess of $1M.

Summary of Buyer Profiles on Axial

Members use Axial’s Buyer Presence and Profiling tools to articulate and communicate their acquisition strategies to the seller community across multiple sub-industries, transaction sizes, geographies, and transaction types.

The chart below details the industries in which Axial buyers seek to make acquisitions, as identified by their transaction profiles. Over the last 90 days, the most sought after companies were within Industrials (71%), which includes Capital Goods, Commercial and Professional Services, and Transportation & Logistics, followed by Consumer Discretionary (57%).

The two charts below highlight the target revenue and EBITDA ranges detailed in the Buyers’ transaction profiles. 91% of Axial buyers indicate their desired revenue range for target acquisitions fall between $15M and 50M.  As seen in the second graph, 87% are seeking opportunities whose EBITDA fall between $2-5M, closely followed by $5-15M (77%). This includes transaction profiles articulating private equity platform acquisitions, portfolio company add-on acquisitions and strategic buyer business unit transaction profiles.