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Serial Acquirers Out In Full Force

By Generational Equity

07/15/2011

Most middle-market business owners are surprised when they learn how active professional buyers are in the U.S. The misconception that I find all too common is that the recession killed M&A activity and that it has yet to recover. I think we have put most of that myth to rest in past articles we have published about today's market being a seller's market, M&A activity being up 30% and a number of synergistic private equity add-on acquisitions. But what really surprises people is just how active strategics are in today’s market. Most of these deals get very little publicity since they usually are not billion-dollar mega-deals. Buyouts recently analyzed the most active strategic buyers since January of 2010. Here is their list of the top 10 “serial acquirers:”

  • 3M = 26 acquisitions
  • GE = 24
  • ABB, Ltd = 20
  • IBM = 17
  • Caterpillar = 16
  • HP = 14
  • Ametek = 8
  • AMEC = 8
  • BAE Systems = 8
  • Roper Industries = 5

It appears that the recession and its effects on business confidence did not slow the deal-making activities of these companies down at all. Historically, GE has been one of the most acquisitive companies in the U.S., making dozens of acquisitions annually and doing so year after year. 3M always ranks high as well. Interestingly, most people think of 3M as an R&D company, spending millions on developing new products internally. And they do that, but they have also learned that the fastest (and safest) way to create new technology is to buy it.

These serial acquirers know that finding and acquiring solidly performing companies provides them with a greater return than trying to grow organically. This is especially true in our current economic environment. When the economy is only expanding at 1.5% annually, it is hard to grow internally. Also, these companies are not risking the farm on closing billion-dollar deals. Many of the targets they acquire are middle-market companies.

So keep this in mind when you hear someone say that deal making is dead and only large players are targets. Serial acquirers are active and are looking for great middle-market deals all the time.

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