Great Lakes regional M&A update: Q2-2016

Baker Tilly Capital, LLC’s Great Lakes Region M&A update provides a recap of middle market transactions where either the target or buyer is located in Illinois, Indiana, Michigan, Minnesota, Ohio or Wisconsin. The “middle market” for purposes of this newsletter is defined as transactions with enterprise values between $10 and $200 million.

Middle market M&A transactions in the Great Lakes Region continued to fall during 2016’s first quarter. As illustrated below, the number of deals with reported values has steadily fallen from 57 during 2015’s second quarter to 31 during 2016’s second quarter. During 2016’s second quarter, the aggregate value of deals with reported transaction values was higher than 2016’s first quarter but is below the previous four quarter rolling average.  This continues the downward sloping trend as each of the last four quarters. While the trend line has been downward sloping, higher EBITDA multiples are continuing.

Great Lakes regional middle-market M&A activity
Number and aggregate value of deals with reported value >

The number of middle market M&A deals in the Great Lakes Region with or without reported values has also steadily declined. There were 319 closed deals during 2016’s second quarter compared to 360 during 2016’s first quarter and 402 during 2015’s fourth quarter.  Throughout 2012 through 2016’s second quarter, the highest number of closed deals during a quarter was 562 during 2012’s fourth quarter and the lowest was 277 during 2013’s first quarter.

Average size of middle market deals with reported values – Great Lakes Region >

The graph below depicts the quarterly trend of average EV/EBITDA multiples in the Great Lakes region for transactions of all sizes. During 2016’s first quarter, the average EV/EBITDA was 10.9x, which has steadily risen from 8.9x during 2015’s second quarter.

Average EV/EBITDA – Great Lakes M&A >

During 2016’s second quarter, transactions with financial sponsor buyers increased to 12.0% as compared to 11.3% during 2016’s first quarter, and above 2015’s average of 11.8%.

M&A Activity by Buyer Type Q2 2016 >

M&A Activity by Industry Q2 2016 >

Select Transactions by Industry >

Financial sector transactions held the highest percentage of deals closed with reported value during 2016’s second quarter.  In addition to the three financial sector transactions listed below, seven other transactions closed including the First National Bank of Eagle River (WI), Fox River Valley Bancorp (WI), Old Murray Bancorp (WI), Cheviot Financial (OH), ONB Insurance Group (IN), Kosciusko Financial (IN), and Apex Capital Management (OH).

Of the deals with reported primary target locations during 2016’s second quarter, Ohio and Michigan had the highest activity with 8 deals each, followed by Wisconsin with 6 deals. The highest value acquisitions by state and the highest value acquisitions with reported Enterprise Value/EBITDA or Enterprise Value/Revenue multiples are displayed below.

Highest Value Acquisitions from each state (targets) in Q2 2016 >

View the full Great Lakes regional M&A update


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