Lower Middle Market Weekly Outlook

Good morning from a rainy New York. Since 2008, corporations have been keeping a careful eye on their balance sheets, building up larger and larger cash reserves. As the stockpiles grew larger, deal professionals waited for the strategics to eventually loosen their purse strings — and it appears the time has come.

Last week, the Federal Reserve released numbers indicating that, for Q1’14, the cash stockpiles for corporations dropped by $91 billion. It is unclear whether this was a one-time surge or a return of strategic acquisitions, but the massive mergers of late have certainly factored into the dollar value.

In other news, not all PE-backed IPOs are created equal.

Transactions:

• Main Street invests in Datacom
• Marcum Cronus changes its name back to Cronus Partners LLC
• Syntaxis Capital backs Expert Petroleum
• Shore Capital Partners closes $112.5 million fund
• Blue Sea Capital closes first fund with $327.0 million
• Wabtec completes acquisition of Fandstan
• Albireo to acquire Energy Options
• Argonne Capital completes acquisition of On The Border Mexican Grill & Cantina
• Bally Technologies to acquire Dragonplay
• PPG Industries to acquire the Homax Group

Events:

• Tuesday roundtable: Removing Roadblocks in the NDA
• Wednesday conference: IBA’s International M&A Conference

Opinions:

• Are mega-merges killing innovation?
• 5 things to know before launching a private equity firm
• Private equity perspective: The new normal
• Taking a look inside Buffett’s brain
• The place of private equity in a diversified investor’s portfolio
• 5 kinds of crowdfunding you never thought of
• PE managers willing to take ‘transparency pledge’ may win big
• Deloitte has published its 2014 M&A Trends Report
• Why corporate mergers of equals almost never work
• Is mezzanine poised for a revival?
• Why more food industry mergers are likely to come
• Private equity’s debt habit

This week in history… TV Guide merges with Tele-Communications, Inc. (TCI) for $2 billion (1998).

Member Spotlight

Quarton Partners, a leading middle market investment banking firm, acted as the exclusive sell-side financial advisor on three recent transactions: Wynnchurch Capital’s acquisition of Indiana Limestone Company, Freestone Partners’ sale of Service Refrigeration Company to Source Refrigeration & HVAC, a portfolio company of Arsenal Capital Partners, and AEA Investors’ acquisition of Galco Industrial Electronics.

Quarton provides merger and acquisition (M&A) advisory, equity and debt capital raising and advice on complex securities transactions. Quarton’s principals have completed over 500 transactions in 25 countries globally across a wide range of industries, including business services, consumer products, distribution, healthcare, industrial, manufacturing, and technology. For more information, contact Eric Van Dam at 248-594-0400.