M&A slow, but may be ready to bust out - Business First of Buffalo:

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The problem is getting seller to close. “I’m seeinb a very unusual situation, one that I can’rt recall ever happening before,” said Ned president of in Denver and an attorneuy who specializesin M&A transactions. “Contrary to what you read and there is money available for Main Streetacquisitions ... Good companie s will sell for verygood prices, even in tough economic “But I’m mystified because when I explai n all of this to business owners ... I can’yt make them come to a decision. They’rde just absolutely paralyzed.
” Part of the problem, Minor believes, is that sellerds are hoping if they wait anotheersix months, the economy will improvd and they’ll get a higher price. Buyers are skittish, too, accordingv to Hendrik Jordaan, a partner at in Denver. Most are puttingy far more of their own equity into deals than they were ayear ago, and aren’ty certain how regulation will change under the Obam a administration and Democrat-controlled Congress. “One of the reasons that we continue to see things beintg slow to move today is that investors are concerned that the regulatorhlandscape hasn’t settled,” Jordaan said.
“Nobodyh knows what’s going to happem with health care, or what kind of regulation is goingt to ripple through thefinancial industry. “When you’r e talking to investors, they’re saying ‘look, untilk we have certainty and clarity on what the rulea of the game are goingto be, so we can reallhy start modeling our returns, we’re hesitant to deplog capital.’ I think you’r e going to start seeing capita move ... in the second half of 2010.” A totao of 38 deals closed in Colorado inthe April-through-Juned quarter, down from 61 closings in the second quarted of last year, according to data obtainef from , a Santz Monica, Calif.
-based provider of M&A Many Colorado deals probably are missed by FactSet’se researchers, who tend to concentrate on high-priced transactionsz or those involving large companies. Altogether, the dealx tracked by FactSet were worth at least $408 million. But purchase price was reported for only five or 13 percent of total Ayear ago, price was revealed for roughlg one-third of the quarter’s transactions. Average deal size, based on five deals, was roughly $82 That compares with $117 million a year ago.
“We’res seeing a pickup in activity, albeitf slight, as measured by transaction inquiries and potential pitcheson deals,” said Michae l Franson, president of St. Charles a Denver-based investment banking firm. “We’rre quite busy, but getting deals done is difficult. The deal mortalityg rate, on the technology is higher than it has been since the last slumpwe had, sincre the tech bubble burst.” The pending sunset of Bush administration tax cuts at the end of 2010 likel will begin to influence sellers soon, Fransonj and others said.
Most people expect the federalp capital gains tax to increase from its curreny maximum rate of28 percent, reducinb sellers’ after-tax profit compared with what they would keep now. “Ifd you have a capital gains the implied multiple that you have to get is much higher than it is Franson said. “So it’s going to drivse sellers intothe marketplace. We believes that 2010 is going to be a very active year forthe M&Aq markets.” Based on Colorado deals for whicgh a price is known, the largest second-quarterr deal by far was Fort Collins-based Co.’es (NASDAQ: WGOV) $356 million acquisition in Apri of , a Santa Calif.
-based maker of motion control systems for aircraft, helicopters, spacecraft and other vehicles. Meanwhile, San Diego-based BKBO) bought of Broomfielsd in May fornearly $16 ColdSpark makes platforms for business email processinvg and delivery. (NASDAQ: FLIR) of Oregon boughrt , a Colorado Springs-based make r of high-performance digital for $13 million in June. Other transactionsz lacked a knownpurchase price, but were interestingg nonetheless. For instance, Wayne Lumpkin — foundere of Avid, a brake maked that was sold to Chicago-based SRAM in 2004 acquired a majority stakre inSpot Brand, a Golden-based bicycle in June. GlobeImmune, based in forged a deal in Maywith Summit, N.J.
-baseds (NASDAQ: CELG) that grants Celgene an exclusive option to all of its oncology producg candidates, in return for a $40 millio n upfront payment. Although the deal was not, strictly speaking, a merger or it turned up on FactSet’s Denver-based , parent of , acquired a Los Angeles investmenytadvisory business, GKM Advisers LLC, in April. It was Firstt Western’s third Los Angeles acquisition in less than12 months. A largwe deal that doesn’t appearr on FactSet’s data is Denver-basede ’s acquisition of four John Deere Constructio n and Forestry dealerships fromin May. Purchase price wasn’rt revealed, but Honnen Equipment Co.
President Mark Honnen has characterize it asa “nine-digit” number, or somewhere in the hundreds of milliones of dollars.