R.L. Hulett

R.L. Hulett has published its Q3 M&A Update on the Business Services Sector. Report highlights included:   ‣ As a % of total capital invested in M&A transactions, PE participation increased substantially in YTD Q3 to 65.7% from 50.8% in 2023.   Please visit our website to discover the full insights and detailed analysis.

With the upcoming 2024 US presidential election, business owners, investors, and dealmakers are closely monitoring how potential shifts in political leadership may influence the private markets. In a recent article, PitchBook analyzed key regulatory and policy differences between the two parties that could impact the overall M&A landscape, with implications for sectors such as healthcare, environmental services, industrials, and SaaS.

Business owners don’t always sell for financial reasons. Atlasview Equity Partners recently highlighted several personal and operational reasons that can drive a sale: ‣ Retirement – With no succession plan, many owners want to step back and enjoy retirement. ‣ Partner Disputes – Differences in strategy or vision can lead to buyouts. ‣ Burnout – Running a business is demanding, and some owners decide it’s time for a change. ‣ Tragedy – Personal circumstances like health or family matters can prompt a sale. At R.L. Hulett, we've helped many business owners in each of these situations create successful outcomes that meet both personal and financial goals. If you're interested in exploring your options, R.L. Hulett is here to guide you through the process.

R.L. Hulett has published its Q3 M&A Update on the Industrials Industry. Report highlights included: ‣ M&A deal volume in the Industrials sector increased 4.6% in Q3 to 428 deals from 409 deals in Q2, and increased 1.2% from 423 deals in Q3 of the prior year.  Please visit our website to discover the full insights and detailed analysis.

R.L. Hulett has published its Q3 M&A Update on the Food & Consumer Industry. Report highlights included: ‣ The median EV/EBITDA multiple for reported private equity deals increased to 5.93x in 2024 from 4.07x in 2023, and increased for strategic deals to 13.58x from 6.51x in the prior year. Please visit our website to discover the full insights and detailed analysis. #Food #Consumer #MergersAndAcquisitions #MiddleMarket

R.L. Hulett has published its Q3 M&A Update on the Software & Tech-Enabled Services Industry. Report highlights included: ‣ The median EV/Revenue multiple for reported private equity deals  increased to 4.96x in 2024 from 4.83x in 2023 but decreased for  strategic deals to 2.93x from 3.65x in the prior year.  Please visit our website to discover the full insights and detailed analysis. #Software #Tech #MergersAndAcquisitions #MiddleMarket

We’re witnessing significant shifts in market dynamics as competition among private equity firms intensifies for high-quality assets. An article from Middle Market Growth Magazine recently highlighted this trend: "Assets with strong end markets, solid growth potential, and good margins that are not capital-intensive traditionally garner a lot of private equity interest—even more so in the current environment. This is evident in sectors such as consumer services, maintenance repair and overhaul, industrial services, marketing services, IT services, and facility services, where closed deal volume for companies with $50 million to $500 million in enterprise value (EV) has collectively grown, even since the peak of 2021." This heightened interest has also led to a bifurcated market, with large amounts of capital chasing a limited number of deals in the lower middle market. "The increased competition has naturally resulted in higher valuations for in-favor assets. One example is the broader business services category, where valuation multiples jumped approximately 2x in 2023 compared to 2021 for deals in the $100 million-to-$250 million EV range." At R.L. Hulett, we’re acutely aware of these pressures and opportunities. As valuations rise and competition intensifies, our role in helping clients navigate this landscape becomes even more critical. By staying ahead of these trends, we ensure that our clients are well-positioned to capitalize on the most favorable opportunities in today’s market.

Private equity is gaining momentum, with 2023 marking a return to double-digit annualized returns. According to recent PitchBook data, global PE funds posted a one-year IRR of 10.5% for 2023, up from 8.5% through Q3 2023 and a significant recovery from the -1.4% dip in 2022. The uptick is expected to continue, as preliminary Q1 2024 results show a positive 2.0% return. Exit activity, a key driver of PE fund performance, exhibited significant YoY growth in the first half of 2024. This increase suggests that the market may be on the path to recovery, signaling a favorable outlook for private equity investors. At R.L. Hulett, we're keeping a close watch on these trends, as the recovery in exit activity and improved returns signal promising developments for the private equity landscape. We're dedicated to leveraging these insights to deliver exceptional value for our clients.

The private market is showing promising signs, reflecting the most favorable conditions since the Fed's rate hikes began in early 2022, as detailed in PitchBook's latest Quantitative Perspectives report. Inflation is inching closer to the Fed’s 2% target, and while there have been recent fluctuations, the labor market remains resilient. Improved lending conditions, driven by expectations of lower interest rates, are bolstering capital availability for private investments and M&A activities. July introduced early indications of a possible economic slowdown, with a weaker-than-anticipated jobs report pushing the unemployment rate to 4.3%—a three-year high. This sparked immediate market reactions, including recession fears and speculation about quicker rate cuts. Early August saw a shift towards risk aversion: equity indexes declined, credit spreads widened, 10-year Treasury yields fell below 3.8%, and market volatility increased. Despite these job market concerns, Q2 2024 saw strong GDP growth, and core inflation showed signs of improvement. This easing of inflationary pressures has shifted the Fed’s tone, with markets now anticipating a rate cut in September. At R.L. Hulett, we are noticing a pick-up in M&A activity corresponding with these macro trends. Our team is closely monitoring these developments to capitalize on emerging opportunities for our clients.

As highlighted by PitchBook, private equity firms are increasingly favoring exits to strategic acquirers. The median deal value for PE assets sold to strategic buyers grew by an impressive 70.8% in 1H 2024, reaching $480 million, up from $281 million in 1H 2023. “Corporate buyers, with the ability to tap cash on their balance sheets, stock, or investment-grade debt, have greater flexibility and a lower cost of capital to fund larger acquisitions. In addition, corporate buyers expect to achieve cost and revenue synergies from an acquisition, positioning them to pay high multiples for ideal targets.” At R.L. Hulett, our extensive experience in advising successful transactions allows us to understand how aligning with strategic buyers can optimize outcomes for our clients. Our commitment to conducting thorough market analysis and providing tailored advisory services ensures our clients are positioned for success.