After the credit crunch, the middle market is the deal haven for private equity investors and corporates looking for niche companies. At The Deal's M&A Outlook 2009 conference on Wednesday, experts were on hand to answer some burning questions like where the hotbeds will be for middle-market activity down the road and when IPOs will return as a favorable exit strategy. Moderating the panel was Nathaniel Baker, The Deal's middle-market editor. Panelists included:
- Jonathan Peskoff, managing director of investment banking, M&A group, FBR Capital Markets Corp.,
- Hamilton Crawford, managing director at Houlihan Lokey,
- Tom Callahan of Lincolnshire Management Inc.,
- Jay Rothman, a partner at Foley & Lardner LLP and
- David C. Turner, managing director, head of private equity, Guardian Life Insurance Co.
Rothman started things off talking about the buy side from the strategic point of view. "They need to access cash, and they simply don't have visibility. They're struggling with 2009. Boards want to see worst-case scenarios -- where liquidity is coming from, etc. Also, bolt-on dealmaking is available and a more comfortable strategy, while those big transformational deals are uncertain."
Turner jumped in with his strategy for '09 -- looking for smaller middle-market deals with value to be gained without leverage. "PE people never claimed to be market timers, but there are a lot of secondary opportunities."
Private equity is also facing a new era, having been remarkably stable for about 15 years. That generation of dealmakers will have to get resourceful.
Crawford said, "I think we're going back to the credit structure of the late '80s. It'll be interesting to see who's creative enough in making strategies where they're able to grow the businesses they get in." -
Baz Hiralal
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