It’s only 14 days into the new year and TA Associates has already done more deals than most firms do in a quarter. The firm this week acquired a majority stake in eCircle, a Munich, Germany-based provider of email marketing solutions, for more than €60 million. A day earlier, TA invested $45 million for a minority stake in Micromax Informatics Ltd., the third-largest mobile handset provider in India (a deal aided by the firm’s recently opened Mumbai office).
That’s in addition to the firm’s January 2 exit of Logistics Health. TA originally backed Logistics Health back in 2003, with a $72.5 million investment, selling it for an undisclosed amount for Gunderson Lutheran.
Earlier this week TA managing director Michael Wilson commented on his firm’s pickup in activity at a conference hosted by Gridley & Co. “Sellers are coming out of their fox holes to do deals now,” he said. “They’re saying, ‘We saw our lives flash before our eyes, and now things are starting to go back to normal. It’s not back all the way but its safe enough to think about doing something.”
That may explain the firm’s recent slew of deal announcements. I’m curious, though, if TA is doing what every buyout firm proclaimed it would be doing in 2009 but didn’t– taking advantage of the “rare opportunity” of cheap targets at low valuations–or if Wilson’s Return of the Sellers indicates that M&A multiples are creeping back to normal levels. If that’s the case, then we can call 2009 the vintage of Missed Opportunities. If not, we can once and for all conclude that the era of unsophisticated sellers willing to settle for below-market valuations is dead and gone. Valuations were not disclosed on TA Associates recent two deals, but a source familiar with the situation said the firm paid full valuations on each-the firm didn’t get Micromax and eCircle at a massive discount, but it didn’t pay a premium either.
One place buyout firms may find an increase deal flow is their peers. At the Gridley conference, Wilson said, in general, deal flow from other buyout firms may increase as the firms prepare to raise new funds. “LPs are saying they need to see liquidity before they agree to commit to new funds. They’re saying, ‘Show us an exit before you raise your next fund.'”
Such was the case with the recent sale of BCA to Clayton Dubilier & Rice. The UK-based business to business auto sales company was owned by Montagu Private Equity, formerly HSBC Private Equity. The firm launched an auction for the company in October with the goal of exiting by the year’s end as it prepares to launch its second fund.