In the ever accumulating tally of businesses and industries impacted by the longest government shutdown to date, to include private equity backed M&A and IPO markets should not come as a complete surprise. Arleen Jacobius of P&I argues that the shutdown is negatively affecting those firms that were looking to the January window of the IPO market, as well as those M&A deals that require government approval. Moreover, per Jacobius, “delays in closing deals can cause the parties to renegotiate the terms of the transactions, amending the deal.” Thus the shutdown continues to cause headaches in both the public and private sector.
With that in mind, the question remains if 2019 will be a banner year for deal activity, or if this shutdown is a factor in curbing the M&A boom. Government shutdown or not, there is a lot of capital in need of deployment, and deals that need to close. How can you manage your pipeline during this potential slowdown in the approval process? Focus on building up your deal flow, so if and when the government reopens, you will be prepared.
As deals take longer to get approved, this may be an opportunity to scour your broken deals, thus transforming your historical pipeline into an active resource. If firms start to renegotiate prices at the eleventh-hour, as they wait for regulatory blessings, the risk of the deal falling apart increases. This could be the optimal time to revisit transactions that have yet to trade.
By way of the SPS Portal, users can cross-reference an internal pipeline with SPS market data to ascertain which deals are available. At its core, this functionality enables users to source quieter deals that they have previously invested time and resources in closing. It makes sense to reevaluate these processes and relationships, particularly in the weeks and months ahead, as to which transactions collapsed as a result of the shutdown.
Times of crisis typically present opportunities, and the firms that capitalize on these moments are generally rewarded. While this shutdown may be an inconvenience at best and stall deal activity, it could be a catalyst in the M&A market to push more relevant deals across the finish line. To find your firm’s conspicuous competitive advantage during this shutdown, look to cross-reference your pipeline with SPS market data.
Fun fact – The first government shutdown occurred under the 19th President, Rutherford B. Hayes.
Last week’s deals todayJanuary 14 – 18, 2019
~105 deals traded
Deal of the weekLeggett & Platt Inc. completed its acquisition of Apptio Inc. for $1.25 billion from equity firm Arsenal Capital Partners. The Georgia-based target is a manufacturer of specialty flexible polyurethane foam for the bedding and home furnishings industries.
Most active subsectors
- IT: Software & services
- Industrial: Equipment & products
- Services: Data & information
- Services: Misc., asset light
- Media: Marketing & sales services
Most active cities
- New York