Diana Hayes was featured in the August 26, 2022 issue of the Tampa Bay Business Journal discussing the state of M&A in the middle market.
While some project a weak outlook for merger and acquisition activity for the remainder of 2022, Hayes said Trenam isn’t bracing for a slowdown in dealmaking in Tampa Bay. “It’s still a pretty active market,” she said. “Deal volume is not as high as last year, but there are a lot of good synergies in the market, and institutional investors still have a lot of capital to deploy.”
Hayes told the publication that Trenam’s Business Transactions practice is industry agnostic but focuses on middle-market companies, which are ubiquitous in the Tampa Bay region and throughout Florida. “If or when there is a slowdown, it will start at the top with mega-deals,” Hayes said, noting that the middle-market will likely remain insulated from a downturn longer than others.
Rising interest rates could lead buyers to consider different deal structures, such as using earn-outs, to bridge valuation gaps. Record-high inflation is also affecting the market and causing some buyers to seek add-on acquisitions and synergies with other companies to offset depressed margin growth from rising costs.
“Inflation is increasing focus on diligence,” Hayes said. “Companies have to decide if they can pass costs on or make changes in contracts in terms of pricing; otherwise, they’ll get squeezed, and valuations will decline.”
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