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Q3 2014 Review

Trusted.   Proven.   Global.

Quarter 3, 2014  Newsletter  
Volume 4, Issue 3


First three quarters

of 2014:

Highest middle-market deal value for the period in five years

 
Dealmakers have been predicting that 2014 would be a great year for M&A, and, so far, they’re right. 


 
The first nine months of the year yielded 1,721 completed middle-market transactions, the second-highest deal volume for the January-through-September period in five years. Total deal value was $230.3 billion, the highest for the period in five years. 


 
In one of the more notable transactions of the third quarter, Hormel Foods Corp. (NYSE: HRL) closed the $450 million acquisition of CytoSport Inc., maker of protein drink Muscle Milk, in August. The deal came amid great interest on the part of strategic buyers, private equity firms and consumers in vitamins, minerals and supplements, as reporter Allison Collins wrote about  in Mergers &Acquisitions September cover story

 

The retail industry also produced significant transactions in August. Footwear group Steve Madden (Nasdaq: SHOO) closed the purchase of Dolce Vita Holdings Inc. for $60.3 million, just one example of the consolidating shoe business in 2014.

 

The tech sector delivered September’s largest middle-market deal, as competition heated up for Twitch Interactive Inc., an online community of video gamers. Amazon.com Inc. (Nasdaq: AMZN) took home the prize for $970 million, marking the Internet company’s biggest acquisition ever.

 

The fourth quarter will provide the ultimate proof of whether or not the optimism about 2014 was justified. 

 

Excerpts from article by Mary Kathleen Flynn, Mergers & Acquisitions  (10/6/2014).  

 

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Tokyo: 

The 2014 IMAP

Symposium & Conference

 

Our IMAP Symposium, Partners Meeting and Conference is rapidly approaching!

 

On October 16th IMAP will welcome an expected 300-400 executives invited from companies such as Osaka Gas, Shiseido, Kikkoman, Nomura, Kobayashi Pharmaceuticals, Fujitsu, Nissan, NTT Group and Mitsubishi Corporation – to name a few – to our IMAP Symposium.  

 

Key agenda items include:

  • The Three Arrows of Abenomics and the Impact on Japanese Corporate Competitiveness
  • Japan M&A Trends
  • Japan M&A Sector Breakdown

Please contact us if you have an interest in receiving the notes from the Symposium, or have any questions!


 IMAP’s strength and premium quality service continue to allow us to offer significant value for clients under any type of market conditions.  Click below to view:

The IMAP At A Glance Report contains regional reviews and highlights on M&A trends in the industry. Click below to view:


The FRG Team
*********

Dr. Maegan Evans,

Managing Director, 1997

 

Dr. David Spellberg, Managing Director, 2013

 

Kurt Andersen,

Managing Director, 2008

 

John Rowell,

Managing Director, 2013

 

Robert Newman, Director, Rail Practice, 2009

 

Erik Bindslev,

Associate, 2012

 

Suzanne Boland, Director

of Administration 2011

 

Caitlin Schubert,

Administrative Associate, 2014

 

Kerry Dustin,

Founder & CEO, 1997

 

***********

 

Our Strategic Advisors

 

Jerry Bogo,

Multi-Industry, 2008

 

Robert McCashin,

Defense & IT,  2009

 

Mark Michel,

Multi-Industry, 2012

 

Neil Goeren, Innovation & Consumer Products, 2012

 

Michael Benz,

Multi-Industry, 2012

 

Ron Glah,

Multi-Industry, 2004 

 

Frank Pinto, IT,  2004


Clancey McKay,

Multi-Industry, 2014

 

Betsy Allen,

Multi-Industry, 2014

 

***********

Securities conducted through StillPoint Capital LLC, where Amy Cross is CEO and Chief Compliance Officer. Member FINRA/SIPC.

Join Our Mailing List

 


Welcome to FRG’s Newsletter

 

KCD 2013

Dear Colleagues and Friends:

 

In a few days Maegan and I will depart for Tokyo, to join our IMAP colleagues
partners from around the world at the 2014 IMAP Symposium and Conference.

 

IMAP partners meet twice a year in a different destination to discuss ideas, collaborate on opportunities and to share our perspective on global business.  Of course, we also share good wine, fellowship and enjoy one another as friends and business associates.

 

This friendship and collaboration is the “glue” that makes IMAP so different from other global organizations. The Tokyo meetings are being sponsored by our IMAP partner, Pinnacle Inc., a leading Japanese strategic advisory firm and a long established partner in IMAP. Pinnacle’s Chairman, Ikuo Yasuda, and its partners, are extremely well connected in the Japanese community. This is evidenced by the attendance of Japan’s top 200 CEO’s at the IMAP reception Thursday evening at the Imperial Hotel.

 

The Tokyo meeting is particularly timely as Japanese interest in buying US companies is soaring.  FRG was recently engaged to acquire a series of US companies by a legendary, centuries old Japanese firm.

 

Tokyo is the most populous metropolitan area in the world with over 37 million people.  Tokyo was ranked highest last year (TripAdvisor) for “best overall experience, helpfulness of locals, nightlife, shopping and culture.  The city is home to 51 of the Fortune Global 500 companies, the highest of any city in the world.  We look forward to writing about the highlights of the symposium in our next newsletter!

 

Best regards,

Kerry 

 

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Manufacturing in the US
and the Health of our Economy

MAE

Maegan Evans, Ph.D.
The World Bank performs a comprehensive analysis of structural costs to start and conduct business in virtually every country in the world.  As might be expected, advanced economies receive the highest rankings because of infrastructure, rules and institutions that make starting a new business feasible.  these countries have flexible labor and capital markets and can allocate resources based on consumer demand.  The US currently ranks 4th in terms of the ease of conducting business with Singapore ranked #1, Hong Kong #2 and New Zealand #3.

 

So what is the connection between the ease of doing business and the health of the US manufacturing sector? Consider the following statistics and how this impacts our ability  to generate jobs, sustain a work force, produce and export our goods around the globe, and pay down our trillions of dollars in national debt:

  • Manufacturers in the US perform two-thirds of all private sector R&D in the nation driving more innovation than any other sector.  This correlates into jobs across all business sectors.
  • In 2013, manufacturers contributed $2.08 trillion to the economy, up from $2.03 trillion in 2012.  This was 12.5% of the GDP.  For every $1.00 spent in manufacturing, another $1.32 is added to the economy, the highest multiplier effect of any economic sector.  
  • Taken alone, manufacturing in the US would be the 8th largest economy in the world.
  • Manufacturing in the US supports 17.4 million jobs-about one in six private-sector jobs. More than 12 million Americans (or 9 percent of the workforce) are employed directly in manufacturing.
  • In 2013, the average manufacturing worker in the US earned $77,506 with pay and benefits. The average worker in all other industries earned $62,546.
  • Manufacturers in the US are the most productive in the world surpassing the worker productivity of any other major manufacturing economy, leading to higher living standards and wages (data published by the National Association of Manufacturers, “NAM”).

One would assume that the enormous financial and R&D contributions of the manufacturing sector to our economy would be enough to ensure policy makers promote and support the competitiveness of the manufacturing sector and not hinder it’s growth. This is not the case. Healthcare costs are one of the most difficult challenges facing manufacturers.

A recent survey conducted by the NAM includes the following findings from manufacturers across the US:

  1. 82.2 percent of manufacturers identified rising health care and insurance costs as their top challenge, an increase from 74.0 percent in the previous survey months earlier. In the last 10 years, employee healthcare costs are up close to 70%.
  2. 66.9 percent identified the unfavorable business climate due to taxes and regulation as an important challenge.
  3. 66.9 percent listed uncertainties related to the political climate as a top concern.

The NAM (Chief Economist Chad Moutray) warns that the manufacturing sector remains stuck in neutral as the sector faces a number of challenges and uncertainties about rising healthcare costs, taxes and the regulatory environment. To see strong growth in the manufacturing sector through 2014 and into 2015, economists agree that Washington needs to act responsibly to reduce these uncertainties allowing businesses to make plans for the future. Cooperation and agreement from policy makers will be critical to better global competitiveness in US manufacturing.  Washington will clearly be the biggest headwind.


The Internet of Things:
What is it?

Last month, Goldman Sachs Equity Research highlighted an interesting topic – The “IoT” – or Internet of Things.  This third wave of the internet is the next mega-trend and may be the biggest one yet.  

The Internet of Things connects devices such as everyday consumer objects and industrial equipment onto the network, enabling information gathering and management of these devices via software to increase efficiency, enable new services, or achieve other health, safety or environmental benefits.

S-E-N-S-E

What the IoT does

How it differs from the Internet

Sensing

Leverages sensors attached to things (e.g. temperature, pressure, acceleration)

More data is generated by things with sensors than by people

Efficient

Adds intelligence to manual processes (eg, reduce power usage on hot days)

Extends the internet’s productivity gains to things, not just people

Networked

Connects objects to the network (eg thermostats, cars, watches)

Some of the intelligence shifts from the cloud to the network’s edge (“fog” computing)

Specialized

Customizes technology and process to specific verticals (eg healthcare, retail, oil)

Unlike the broad horizontal reach of PCs and smartphones, the IoT is very fragmented

Everywhere

Deployed pervasively (eg on the human body, in cars, homes, cities, factories)

Ubiquitous presence, resulting in an order of magnitude more devices and even greater security concerns

Source: Goldman Sachs Global Investment Research.

 

Falls River Group, LLC, a Global Merger and Acquisition Advisory Firm based in Naples, Florida, and a member of IMAP, an exclusive global partnership of leading M&A firms providing M&A services focused on the middle market.  IMAP celebrates 40 years of successful global collaboration with consistent ranking among the top M&A advisories throughout the world.  From more than 35 countries throughout North and South America, Eastern and Western Europe, the Middle East and Asia, IMAP advisers provide strategic merger, acquisition, and divestiture and related corporate finance services.


 

For more information, visit:

www.imap.com and www.fallsrivergroup.com

 

 

 

Trusted.  Proven.  Global.

 

 

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