Sports enthusiasts can attest, there are few scenarios more thrilling than a 4th quarter comeback. And no NFL quarterback has led more 4th quarter comebacks than future Hall of Famer, Tom Brady. A brief look at history would indicate that total U.S. deal volume and Tom Brady have something in common: completing a 4th quarter comeback.
In four of the past five years, total U.S. M&A deal volume in the 4th quarter has exceeded total deal volume in each of the preceding three quarters, respectively. Fiscal year-ends, budgeting cycles, bonus incentives, tax considerations, achievement of annual targets, and the race to lock in financing before year-end are all factors consistently contributing to the uptick that often makes the 4th quarter the most promising quarter in terms of total deal closures.
As business executives plan for the year ahead, the urgency to close before year-end is frequently fueled by a desire to project the wholistic operations of a company for the following fiscal year and beyond. Additionally, the aforementioned stakeholders are often compensated by way of performance-based incentives associated with a deal closure. From a corporate level, companies may be enticed to exercise certain tax-related advantages associated with a sale, or purchase, of a company before the New Year’s Eve ball drops. Similarly, companies will push for achievement of annual targets where, naturally, the 4th quarter deadline creates a sense of urgency. For a varying degree of the aforementioned reasons, it is not uncommon to see a push for transaction finalization as quarters come to a close.
Sports enthusiasts, business owners and M&A executives alike all love the thrill of a 4th quarter comeback, which based on the total U.S. transaction volume for the month of October 2023, the 4th quarter of 2023 appears to be yet another case study in the 4th quarter comeback saga.
M&A Market Activity
Deal volume within the U.S. for the month of October 2023 declined by 19.2 percent when compared to the same period in 2022. Recent deal volume within the U.S., however, increased by 15.2 percent for the month of October 2023 when compared to the prior month.
The Columbus, Ohio M&A market continued to see strong deal volume in October 2023 with deal volume increasing by 50 percent when compared to September 2023. October 2023 saw several noteworthy transactions in the Columbus region, with BroadStreet Partners, Safelite Group, and Vapen Ohio, all companies with a greater-Columbus presence, completing acquisitions within the month.
Deal of the Month
Winsupply Inc., located in Moraine, Ohio, is one of the largest distributors in the United States. Winsupply expanded distribution capabilities this past month by acquiring Keidel Supply, a premier plumbing, cabinetry, lighting, appliance and PVF distributor with two locations in Ohio.
Based in Cincinnati, Keidel Supply has served the needs of Greater Cincinnati residential and commercial plumbing contractors, builders, remodelers, and homeowners since the early 1900s.
"Winsupply is confident that Keidel Supply will be a great partner and fit into the Winsupply Family of Company's overall vision for the future," said Jeff Dice, president, Winsupply Inc. "The culture of Keidel aligns seamlessly with that of Winsupply. Mike Barton, CEO of Keidel, and John Robinson, executive VP of Keidel, have established a remarkable team of service providers. Winsupply is delighted to collaborate with Keidel and continue providing exceptional service to contractors in the greater Cincinnati region.”
David Shibley is an Analyst with MelCap Partners, LLC, a middle-market investment banking and advisory firm. For more information on MelCap Partners, please visit www.melcap.com or email [email protected].
Sources: Company Websites, PitchBook, and S&P Capital IQ