Middle Market M & A, 2nd Edition

Preface

Deal markets go through cycles just as the broader economy does. The volume of deals flows or ebbs, influenced by interest rates, overall economic conditions, demographic or industry trends, the availability of capital, and other factors. These factors also affect the price of deals (i.e., the average multiple of revenue or EBITDA [earnings before interest, taxes, depreciation, and amortization] a buyer is willing to pay), which also rises and falls. The need for guidance is constant, however, whether the mergers and acquisitions market is bullish or bearish, whether it favors sellers or buyers. As you will see in this book, middle‐market capital markets, which are mostly private, are fundamentally different from public markets. Transactions are different in private markets. The participants—buyers, sellers, and the advisors who help each party—also tend to be different; many big investment banks do not do deals in the middle market, for example. Most sellers (and many buyers) are inexperienced—selling a founder‐led business is almost always a once‐in‐a‐lifetime event. Acquisitions involving private companies are largely unregulated by groups such as the Securities and Exchange Commission.

For all these reasons, the body of knowledge for middle market M&A differs in critical ways from what is taught in corporate finance classes and practiced by global enterprises, big investment banks, stock exchanges and their regulators, and others who are involved in deals that make ...