If you’re strategic acquirer, 2015 will be a good year for you.
In 2014 we started to see companies, especially strategic acquirers be more aggressive about M&A. This likely will continue and even accelerate in 2015, especially since many still have a record amount of cash on their balance sheets.
While we’ve had a pretty significant growth in deal value over the past year (50%), the number of deals has only increased 8%. Average deal size has increase significantly by 39% when compared to 2013 values. This is sort of a caution flag out there for folks to say, “Let’s be careful about overpaying.”
Part of the challenge for strategic acquirers in 2015 will be weighing the cost of overpaying against the consequence of not being involved in some of these deals. While there is no reason to be alarmed, strategic buyers should pay attention to multiples in the coming year.
Despite this, there is still opportunity for strategic buyers. In the last quarter of 2014, we continued to see a decline in the capital raised and the number of deals closed by private equity firms.
This is all good news if you’re a strategic acquirer because it means less competition. In addition, you should be seeing more strategic value in the form of synergies primarily around cost savings.