Leap year is always a fun and interesting time. Started by Julius Caesar 2,000 years ago and improved by the Gregorian calendar in 1582 by Pope Gregory XIII, February adds another day every four years because the earth takes an extra 5 hours and 49 minutes beyond our 365-day calendar to move around the sun. Just as society adjusts its calendar, the M&A market may have to adapt to the way the political and economic climates are moving.
This is also an election year and that always bring a mixture of emotions as voters await the outcome to see who will be selected and what their respective agendas will produce. This year, there are a number of issues that could affect the M&A market. With the current tax laws in place, corporate buyers and private equity groups holding large cash sums available for investment and historically low interest rates, M&A activity should improve throughout the year. It will not be surprising if deal volume gains momentum from anticipated political inevitabilities, similar to the heavy activity at the end of 2010 with the anticipated capital gains tax changes.
Activity in the M&A market did show signs of moving higher in February. According to “S&P Capital IQ,” the number of deals that closed in February was down 16 percent from January. But disclosed dollar volume for the U.S. and Canada was up $6 billion, or 12.5 percent, from January and up $2 billion, or 3.5 percent, from February 2011. It would be encouraging to see this trend line continue into the spring and throughout the year with high values for companies and strong activity in the M&A markets.
For Northeast Ohio, activity was mild.
One company making news was Smart Business Network Inc., which acquired OnMark Solutions Inc. This transaction is the third acquisition Westlake-based Smart Business has made within the past year. OnMark Solutions provides business-to-consumer and business-to-business consulting services for e-marketing. The transaction will allow Smart Business to expand on its marketing communication services for both new and existing clients.
Morgenthaler Equity Partners also had an active month in February, completing both an acquisition and an exit. On Feb. 1, Morgenthaler announced the acquisition of Weber Technologies, by its portfolio company Enginetics Aerospace. Weber Technologies, located in Eastlake, is a manufacturer of precision components for the commercial aerospace and business jet markets with expertise in hydroforming aluminum and exotic metal alloys.
Albert D. Melchiorre is the president of MelCap Partners LLC, a middle-market investment banking firm. He is also a director on the ACG Cleveland board. For more information on MelCap Partners, please visit www.melcap.co. For more information about the Association for Corporate Growth, please visit www.acg.org/cleveland.
Deal of the Month
The deal of the month is awarded to The Andersons Inc., for the acquisition of New Eezy Gro Inc. and Golden Eagle Products. New Eezy Gro, a specialty chemical manufacturer in Carey, Ohio, supplies calcium nitrate and other specialty products to the agricultural and industrial markets. New Eezy Gro’s products are distributed all across the country but are primarily used within the Great Lakes region. The Andersons’ acquisition of New Eezy Gro will expand the company’s existing specialty product line for the plant nutrient division and increase product offerings to key customer groups. The Andersons’ plant nutrient group distributes more than 2 million tons of liquid and dry nutrients annually.
