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Buyouts
Deal Or No Deal
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“There may not be enough liquidity to support the multiples paid over the last few months,” says Jonathan Awner, chairman of the corporate practice group at Akerman Senterfitt in Miami. “There are a lot of variables that could turn this M&A market on a dime.”
Recent corporate deals have spiked to multiples of 10 to 12 times cash flow versus an historical average of six to eight, Awner says. Colonial BancGroup’s purchase of Commercial Bankshares, for instance, carried a multiple of 16.3.
South Florida deals totaled $4.6 billion through mid-August, compared to $8.3 billion for all of 2006, according to M&A data from Thomson Financial. Florida companies have been net sellers. Local companies have sold $4.3 billion in assets in 53 transactions but have purchased only $1 billion in 58 deals.
On the upside, private equity groups have raised $157 billion nationally in 2007. With falling prices and greater volatility in stocks and real estate, corporate assets may be more of a compelling buy, says Andrew Cagnetta, chief executive of Transworld Business Brokers in Fort Lauderdale.
Transworld Business completed 131 south Florida transactions in the first half of 2007, compared to 115 in the year-ago period. Although he remains bullish about deal activity, Cagnetta predicts a buyer’s market for large mortgage companies and home builders.
Even with a credit crunch in the high-yield debt and bank loan sectors, the market should remain stable for traditional buyouts involving middle-market companies with annual revenue between $20 million and $300 million, says Michael Mitrione, chairman of the corporate department at law firm Gunster Yoakley.
“There are some bargains out there,” Cagnetta says.
| Top 5 South Florida Targets | ||
| South Florida Company | Buyer | Value (millions) |
| Oceania Cruises Miami | Apollo Management, N.Y. | $850 |
| Stiefel Laboratories Coral Gables | Blackstone Group, N.Y. | 500 |
| Neff Corp. Miami | Lightyear Fund II, N.Y. | 409 |
| Leon Medical Centers Health Miami | HealthSpring Inc., Va. | 355 |
| Commercial Bankshares Miami | Colonial BancGroup, Ala. | 317 |
| Top 5 South Florida Buyers | ||
| South Florida Buyer | Target | Value (millions) |
| Citrix Systems Fort Lauderdale | XenSource, Calif. | $500 |
| Noven Pharmaceuticals Miami | JDS Pharmaceuticals, N.Y. | 135 |
| Watsco Coconut Grove | ACR Group, Texas | 110 |
| Terremark Worldwide Miami | Data Return, Texas | 106 |
| Equity One North Miami Beach | Buckhead Station, Ga. | 68 |
Source: Thomson Financial |
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