September 2012 

In This Issue:
  1. Dealogic’s YTD/Sept. 2102 M&A Review: Inconclusive.
  2. Election Watch: Romney Brings Attention to Private Equity
  3. Valuation Accounting & PitchBook Preparation Just Got a Lot Harder
  4. Professional Development: Can You Present to the Board?
  5. Macro Econ: Chronic Unemployment? “Just Grow the Economy”

MMIBA Board of Directors:

Dennis Roberts CPA, CVA, ABV, CMAP

Andrew Sherman, ESQ., CMAP

Parnell Black, MBA, CPA, CVA

Richard Jackim, JD, MBA, CEPA

Andy Smith, CPA/ABV, ASA, CVA, CMA

Scott D. Miller, CPA/ABV, CVA, CMAP

Editor: Joe DiPietro

Dealogic’s Global M&A Review
First Nine Months 2012
The Numbers Point in All Directions…

Dealogic has just published its preliminary YTD Sept/2012 M&A Review and the numbers are all over the map. Literally and figuratively. Here’s a quick overview of what’s in this highly inconclusive report:
  • Global M&A volume reached $1.78T in first nine months of 2012, down 17% on the $2.14T recorded during the same period in 2011.
  • Global 3Q 2012 volume of $516.2B was the lowest quarterly total since 3Q 2004 ($467.6B) and was down 18% on 3Q 2011.
  • Cross border volume reached $611.0B and made up 34% of global M&A volume, the third highest cross border share on record.
  • US targeted M&A totaled $607.7B in the first nine months of 2012, down 20% on the same 2011 period ($763.2B), although inbound cross border volume dropped just 2% to $115.2B.
  • Mid-market volume accounted for 27% of global M&A volume in the first nine months of 2012, the highest share since the same period in 2004 (29%).
  • Oil & Gas led the global sector ranking with $221.3B and a 12% record market share in the first nine months of 2012.

You can read the entire 19 page report here.

Election Watch:
Dealmakers Have Romney on Their Mind
The Elephant in the Room and Unwelcome Attention

It was ostensibly a forum for private equity execs to mull over strategies for fundraising and deal making, but no matter where you turned at last week’s Dow Jones Private Equity Analyst conference in New York, the elephant in the room was the presidential candidacy of former Bain Capital head Mitt Romney.

The Republican’s White House bid has made many of his former peers uneasy about being pushed into the national spotlight, as Democrats have used the Republican presidential nominee’s private equity past as a punching bag.

Even former colleagues threw jabs at Romney at the conference, even if those punches were in a lighthearted manner.

“I’m glad Romney is from Bain Capital and not Goldman Sachs,” joked Richard Friedman, global head of merchant banking at Goldman Sachs, at an on-stage interview with Dow Jones’ Shasha Dai.

In many ways, Romney’s candidacy has brought home the increasing need for transparency in the private equity industry, panelists said. Steven Klinsky, founder and chief executive of New Mountain Capital, said firms need to do a better job at airing success stories publicly, while emphasizing the contribution of private equity-backed companies to job growth and community development.

“The microscope is on and you can’t just pretend nobody knows this industry exists,” Mr. Klinsky said.

You can read the entire Wall Street Journal Special Post here.
Valuation Accounting & Deal PitchBook Preparation:
When is an Asset not an Asset?
“What about the Parking Lot? Seriously.”

If your firm performs valuations and/or M&A deal packaging, you probably have been following with much interest the new lease accounting rules.

But, do you have any idea how complex they are getting?

For example, when a corporation leases a building, is the adjoining parking lot automatically included? Or, should the lot be accounted for separately? Does it make economic sense to count the lot as a separate asset from the building, since in a typical suburban office complex one generally doesn’t exist without the other?

Such questions, that would have been considered comical or absurd in the past, are now critically important, and are getting tougher and tougher to answer for CFOs and other executives who account for lease expenses that their companies incur – especially when you consider that the parties in the debate can’t even agree on such a basic element as the definition of an “asset.”

In the example above, for instance, is the parking lot an asset owned by the lessee, or is it simply a piece of rented property? The confusion stems from...

You can read the entire CFO article here.
Practice Management & Professional Development:
Are You Ready for that Unexpected Pitch to the Board?
Match Your Presentation to Your Audience Attendees

Most of your new client business probably comes from existing relationships and warm referrals that started with informal and congenial meetings, and end up with a signed engagement.

But are you prepared for this scenario: An out-of-left-field, last minute invitation to cold pitch the board and operating executives of a middle market company? Probably. But admittedly, you and your pitch team could use some brushing up. If so, here are some quick reminders from the Harvard Business Review Manage Mentor Program.

Every public speaking expert will tell you to get to know your audience ahead of time. But what do you do with that information? You do this: Adjust your presentation to meet their needs in several ways:
  • Consider their comprehension. For example, a presentation to the CFO is going to contain more quantitative detail than a presentation to the operating managers.
  • Include everyone. With a mixed audience, try to address different perspectives explicitly to keep everyone interested. For example, "This will affect the non-equity managers like this... and the shareholders like this..."
  • Establish common ground. If you suspect the audience may be hostile, begin by emphasizing concerns you share. Turn the negative into a positive, if possible.

Need more help than a few pointers? The Harvard Manage Mentor offers an online module of its popular Presentation Skills program. You can learn about it here.

Macro Economics:
"There Is No 'Structural' Unemployment Problem."
Or so Says Edward Lazear

Chronic unemployment has been devastating for millions of US families, the economy, and, consequentially, for those that operate in the M&A and buyout sector.

The US is suffering through its worst employment rebound in its entire history. Even the Great Depression labor market rebounded more quickly.

If it is not fixed, and fixed quickly, the consequences can be catastrophic. We only need look at what is happening in Europe where chronic unemployment is now morphing into civil unrest, the rise of racist, nationalistic, and fascist political groups, and economies teetering on the brink of destruction.

And yet, no one – at least according to this editor – has proffered any realistic solution to the problem the US faces in this regard.

So, when one reads the title of a recent high-level presentation and academic paper with the headlines "There Is No 'Structural' Unemployment Problem," it gets your attention.

In his presentation, delivered at the Jackson Hole Economic Policy Symposium on September 1st, Edward Lazear says to reduce unemployment "all we need to do is grow the economy.”

Sounds simplistic and trite, but Mr. Lazear may possibly have a point. Strong emphasis on “possibly.” Here’s why: Most people don’t realize that 50% of the growth in our current unsustainably high unemployment came from just three industries.

Mr. Lazear, who was chairman of the president's Council of Economic Advisers (2006-09), and is a professor at Stanford University's Graduate School of Business, and a Hoover Institution fellow may be on to something. At least we hope so.

You can read his provocative findings here.
Attention MMIBA Members:
Share Your News with Your Fellow Members

Share your news in the Middle Market M&A Professional! Please submit any completed transactions (“Done Deals”), new people added to your team, office moves, and similar news, to the following email address:

Important Upcoming MMIBA and CTI Events

Upcoming Live Training
Merger and Acquisition Workshops
San Diego, CA - October 1–6, 2012
Ft. Lauderdale, FL - December 3–6, 2012

Advanced Mergers and Acquisitions Workshop
Atlanta, GA - October 23–25, 2012
Philadelphia, PA - November 13–15, 2012
Las Vegas, NV - December 11–13, 2012

Certified Exit Planning Advisor Program

Chicago, IL - November 5-9, 2012

Upcoming Webinars
Monday, October 1, 2012
M&A and the Management Buyout

Tuesday, October 2, 2012
The Mystery of Exit Planning

Wednesday, October 3, 2012
Good Business. Good Management. No Buyer. Using an ESOP to Create the Buyer

Thursday, October 4, 2012
Using the Exit Planning Process to Create Business Strategy

Friday, October 5, 2012
The Seven Habits of Highly Successful Businesses



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