According to several bankers who attended the Chicago Buyouts conference on Tuesday, there isn’t. Eric Malchow, a Lincoln International MD and co-president North America, said that for deals $250 million or less, he’s “not seeing a slowdown.”
“The core middle market hasn’t seen a slowdown,” added John Neuner, a Harris Williams MD.
Both Malchow and Neuner were speaking Tuesday on the panel, “Bankers Roundtable: The M&A Climate — Good or Bad for Deals?”
But one PE exec attending the panel disputed these claims. The exec said there appeared to be a disconnect because lenders are slow and questioned how the bankers could be so busy.
Strategic buyers have been quite active and lenders wouldn’t take part in such deals, Malchow explained. Roughly 70% of sell-side deals at Lincoln went to strategics in 2011, Malchow said. Since strategics often pay with cash, lenders wouldn’t finance these deals, he said.
Separately, the bankers said the current M&A market is great for good companies and they can often be sold for 9-10x. But for companies that are not that good, the M&A market is not as efficient. These “B” companies can sell for 6-7x, the bankers said.
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