Last Thursday I attended the MountainWest Capital Network (MWCN) Deal Flow event. I’ve attended the event many times before, but this year’s was different. The 18th annual Deal Flow report of all Utah deals conducted in 2012 grew substantially. It was in fact, the largest deal year in Utah in about 14 years.
In 2012, there were 292 deals conducted worth more than $11 billion. This was a significant increase over recent years. Even more impressive was the number of mergers and acquisitions (M&A) that took place. There were 110 M&A deals worth more than $10 billion – the largest deal category for 2012.
Of the 110 M&A deals, the largest seven comprised 75 percent of the total, or more than $7.75 billion for the category.
Those seven were comprised of some of the largest M&A deals in Utah history (beat only by the $11.7 billion Albertsons acquisition of American Stores in 1999 in a single deal) including, Vivint, the largest technology acquisition in Utah, who was acquired by Blackstone Group for $2 billion; Ancestry.com, who was acquired by Permira (the largest acquisition in Utah by a foreign buyer) for $1.6 billion; Schiff Nutritional International Inc., who was acquired by Reckitt Benckiser Group Plc. for $1.4 billion; CHG Healthcare, who was acquired by Leonard Green & Partners and Ares Management for $1.1 billion; 1800Contacts, who was acquired by WellPoint for $900 million; Accelerated Payment Technologies, who was acquired by Global Payments for $413 million; and MediConnect Global, who was acquired by Verisk Analytics for $349 million.
MWCN President Devin Thorpe said, “We believe the key driver of M&A volume in 2012 was increasing economic confidence among acquiring companies due to Utah’s strong economy. It is also evident that some of the motivation behind mergers or acquisitions in 2012 was due to concerns about rising capital gains tax increases anticipated in 2013.”
The Venture capital, private equity and angel-investing category continued to follow a steady year-over-year increase in 2012 with $831 million invested in 176 deals. Red Leaf Resource, Qualtrics and Progressive Finance were the top three investments.
Initial public offerings continued its weakening trend among all categories with none reported in Utah in 2012. There were only two in the past three years – both in 2011 totaling $423 million. Only six public offerings were conducted in 2012 totaling $106 million.
“We believe the poor performance of public offerings is due in large part to the large supply of capital in private equity,” said Thorpe. “Current valuations, lower operating costs, lingering and increasing costs, and increased regulation associated with public entities have combined to make IPOs less advantageous.”
The 2012 Deal Flow Report shows that $8.7 billion was gained from out-of-state investors compared to $1.4 billion spent by Utah companies acquiring out-of-state companies.
The 2012 Deal Flow was comprised of a diverse set of Utah companies. The software and technology sector lead all others with 22 percent of deals. Combined, software, technology, Internet software and services accounted for 39 percent of all sectors.
· Software/Technology 22%
· Internet Software and Services 17%
· Healthcare 15%
· Food and Beverage 14%
· Consumer Products/Retail 11%
· Financial Services 8%
· All others 12%
The Deal Flow report is put out by MWCN each year and represents the most comprehensive and complete annual assessment of capital raising and business transactions compiled in Utah. A PDF version of the Deal Flow Report is available at www.mwcn.org.