M&A is Harder Now Than a Decade Ago, Says Goldman Sachs’ Matthews

Here’s one last report from PartnerConnect.

The M&A market is a lot tougher than it was 10 years ago, said Roger Matthews, who heads the global restaurant group at Goldman Sachs.

Matthews, who spoke on the panel “The I-Banker Roundtable: The M&A Climate Today,” said he is seeing lots of different behavior. Sponsors are holding onto assets longer and funds are very interested to put capital to work, he said. “Corporate buyers don’t show up as regularly,” he said.

M&A in 2011 started with lots of optimism and then began to stumble by the summer, said Matthews. This year promises to be a “great deal environment,” although he noted that “lots of sellers don’t want to come to market right now.”

Some companies are finding options outside of M&A. Matthews pointed to Annie’s, the California maker of organic pasta and other foods, which was up for sale but couldn’t find a buyer. The company filed for an IPO in December. In March, Annie’s ended up raising $95 million while its IPO soared 89% in its first day.

What is strong right now? The financing markets. Matthews, who spoke to peHUB on the sidelines of PartnerConnect, said the credit markets can support deals ranging from $1 billion to $15 billion. Anything above $15 billion “becomes very challenging,” he said. There are fewer money-centered banks around to support such large transactions, he said. “There is no longer a Merrill Lynch and a Bank of America. There is just BofA,” he said.

The credit markets, meanwhile, are “choppy” for deals of $1 billion or less, he said.