PE HUB Wire Highlights, 8.7.18


Photo of Luisa Beltran, PE HUB Senior Editor, courtesy of Buyouts Insider.

KPS to sell IES attachments for $690 mln; Are tariffs really so bad for PE M&A?

It’s Tuesday, Hubsters. And it’s a scorcher here in NYC.

Tariff talk: The PE industry is currently undergoing a boom; prices are high, deals are plenty and everyone is out fundraising. Fears of a recession have been looming for years. We all know it’s coming but it’s just a question of when. Will it be as devastating as 2009’s financial crisis? Many GPs have said they don’t expect it will.

One thing that could put a damper on the PE party is tariffs. It’s hard to keep track of all the taxes but the Trump administration this year has slapped tariffs on imports, including steel and aluminum, from trading partners such as Europe, Canada and Mexico. President Donald Trump also is weighing doubling tariffs on $200 billion of Chinese goods, boosting taxes to 25 percent from 10 percent, the New York Times said. China, of course, is retaliating and plans to impose tariffs of up to 25 percent on more than $60 billion in U.S. products.

Paul Aversano, a managing director and global practice leader of Alvarez & Marsal’s transaction-advisory group, thinks tariffs might actually help the PE industry. While Aversano doesn’t think that tariffs are a good thing, their impact could be positive for PE M&A. Read his reasoning here.

Dylan Cox, a senior analyst at PitchBook, has another take on tariffs. In the past year, acquisition multiples have approached post-financial-crisis highs, Cox said. He expects prices to remain high due to the recent U.S. tax legislation and competitive pressures from both strategic and financial buyers. “That said, any decrease in prices stemming from a tariff should be reflective of a change in underlying growth prospects for that company, and should not be thought of as being “cheaper,” Cox said.

What do you think, Hubsters? Could tariffs actually be good for PE M&A? Why or why not? Email me at [email protected]

Minority stake sale: Yesterday, I posited that Golub’s sale of a minority holding to Dyal was one of the first involving a middle market lender. There have been deals involving MM lenders. Steve wrote in and pointed toAntares’s sale to GE many years ago. Carlyle Group also acquiredChurchill Financial in 2011. Steve also mentioned Stone Point Capital, which helped form NXT Capital in 2010. These deals do involve middle market lenders but I’m looking for transactions where lenders sell stakes to outside investors like Dyal or Petershill.

Lots of exits today. KPS is selling the attachments division of International Equipment Solutions LLC to Stanley Black & Decker Inc for $690 million. Read our brief here.

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