Post on 01-Dec-2021
Quarterly Market Insights
2021: Second Quarter
Introduction:
▪ Genesis Capital is pleased to present our
Quarterly Market Insights Report for the Second
Quarter of 2021.
▪ We hope you find this report helpful and
encourage you to contact us directly if you would
like to discuss our perspective on current industry
trends and M&A opportunities.
Table of Contents:
▪ Genesis Capital Overview
➢ Overview of Genesis Capital
➢ Representative and Recent Transaction Experience
▪ Market Insights
➢ Capital Markets Overview
➢ Public Market Valuation
➢ U.S. M&A Market Overview
➢ U.S. M&A Trends by Industry
Inside This Report
Member FINRA / SIPC
1
Market
Insights
Member FINRA / SIPC
Market
Insights
Overview of Genesis CapitalIndependent Investment and Merchant Bank
2
▪ Focused on “Need” not Size
▪ Expertise with Public Corporations
▪ Deep Experience with Family Businesses
▪ Solution Focused vs Product Oriented
▪ Extensive Sell-Side and Buy-Side M&A Experience
▪ National Client Base
▪ Active Cross Border Practice with International Operations
and Buyers
▪ Proven Track Record and Strong References
An Independent Firm Focused On Families & Companies in Growth Sectors of the Economy
Providing a Full Suite of Investment Banking Services Mergers, Acquisitions & Sales
➢ Sell-Side
➢ Buy-Side Acquisition Programs
➢ Management Buyouts
➢ Restructurings
➢ Corporate Divestitures
Financial Advisory Services
➢ Strategic Alternatives Review
➢ Capital and Strategic Planning
➢ Strategic Investments & Joint Ventures
➢ Fairness and Valuation Opinions
➢ Committee Representation
Capitalizations
➢ Recapitalizations
➢ Private Placements
➢ Private Investment in Public Equity (PIPE)
➢ Employee Stock Ownership Plans (ESOP)
Member FINRA / SIPC
Market
Insights
Genesis Capital Track RecordDeep Expertise Across Several Industries
3
and the waste services
division of
(NYSE:WRK)
has acquired
Technology,
Media, Telecom
has been acquired by
a subsidiary of
has been acquired by
a portfolio company of
has received a majority
investment from
Consumer
has acquired
(NYSE: SPB)
has been acquired by
(Nasdaq: PLKI)
(NYSE/TSX: QSR)
has formed a partnership
with and received a majority
investment from
has entered into a long term
agreement with
(NYSE: LYV)
to operate
Leisure &
Entertainment
has acquired
(NASDAQ: SSB)
has been acquired by
Business
Services
has been acquired by
(NYSE:TBI)
has been acquired by
(NYSE: TBI)
a wholly-owned
subsidiary ofand
have been restructured and
rebranded as
Healthcare
has partnered with
a portfolio company of
has been acquired by has acquired
Industrial
(NYSE:KOP)
has been acquired by
has received an investment
from
Member FINRA / SIPC
Market
Insights
$10,839
$18,783
$21,679
$35,079
$50,718
$47,780
93
106
126
114
153 151
0
45
90
135
180
225
270
$0
$12,000
$24,000
$36,000
$48,000
$60,000
2016 2017 2018 2019 2020 YTD 2021
Gross IPO Proceeds IPO Count (#)
$1,549 $5,792
$9,111 $12,042
$75,793
$110,143
8 24
43
59
249
358
0
55
110
165
220
275
330
385
$0
$15,000
$30,000
$45,000
$60,000
$75,000
$90,000
$105,000
$120,000
2016 2017 2018 2019 2020 YTD 2021
Gross SPAC Proceeds SPAC IPO Count (#)
Gro
ss P
roceed
s($
in
Mil
lio
ns
)
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Aug-16 Aug-17 Aug-18 Aug-19 Aug-20 Aug-21
Fed Funds Target Rate LIBOR (3 Month) 10 Year Treasury Note
(20.0%)
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
180.0%
200.0%
220.0%
Aug-16 Aug-17 Aug-18 Aug-19 Aug-20 Aug-21
Dow Jones Industrial Average (^DJI) S&P 500 (^SPX) NASDAQ (^COMP)
Capital Markets Overview
4
Source: S&P Capital IQ, Mergermarket, Preqin, Pitchbook, SPAC Research.
Public Equity Market Indices (1)
Perc
en
tag
e C
ha
ng
e
Interest Rates (1)
Perc
en
tag
e
Notes:
1. Indexed relative to August 2, 2016.
2. YTD as of June 30, 2021.
IPO ActivitySPAC Activity
Gro
ss P
roceed
s($
in
Mil
lio
ns
)
SP
AC
IPO
Vo
lum
e (#
in A
ctu
als
)
(2)
IPO
Vo
lum
e (#
in A
ctu
als
)
Commentary
(2)
▪ On August 2, 2021 the S&P 500
Index closed at 4,387.16, 16.8%
higher than the beginning of the
year, and 36.3% higher than its
average closing price throughout
2020.
▪ The 10-year Treasury Note yield
was 1.20% on August 2, 2021,
27 basis points higher than its
yield of 0.93% at the beginning of
the year, and 31 basis points
above its average closing yield of
0.89% in 2020.
▪ The value of special purpose
acquisition company (SPAC)
gross proceeds in the year to
date (YTD) period ended June
30, 2021 was $110.1 billion.
Gross SPAC proceeds totaled
$75.8 billion in full year 2020.
▪ The value of initial public
offerings (IPO) gross proceeds in
the YTD period ended June 30,
2021 was $47.8 billion, across
151 offerings.
Member FINRA / SIPC
Market
Insights
10.4x11.6x
15.8x
11.0x
16.4x18.8x
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
BusinessServices
Consumer Healthcare Industrial /Manufacturing
Leisure &Entertainment
Technology /Media / Telecom
Q4 '17 Q4 '18 Q4 '19 Q4 '20 Current
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
18.0x
20.0x
Q2 '11 Q2 '12 Q2 '13 Q2 '14 Q2 '15 Q2 '16 Q2 '17 Q2' 18 Q2' 19 Q2 '20 Q2 '21
Mid-Quarter Public Trading EBITDA Multiples (S&P 500)
Public Trading EBITDA Multiples by Select Sector
▪ Since Q3 2011, EBITDA
multiples have increased,
experiencing record highs
through the end of 2017 and into
2018, 2019, 2020 and 2021.
Public Market Valuation
5
▪ Top sectors by EV / EBITDA
valuation:
➢ Technology / Media /
Telecom: 18.8x
➢ Leisure & Entertainment: 16.4x
➢ Healthcare: 15.8x
➢ Consumer: 11.6x
➢ Industrial / Manufacturing: 11.0x
➢ Business Services: 10.4x
EV
/ E
BIT
DA
Low: 7.5x
Q3 2011
EV
/ E
BIT
DA
Commentary
Commentary
10-Yr. Avg. Multiple: 11.3x Current: 16.8x
Source: S&P Capital IQ.Note: Current as of August 2, 2021.
Member FINRA / SIPC
Market
Insights
Private Equity Dry Powder
U.S. M&A Market Overview
6
Source: S&P Capital IQ, Mergermarket, Preqin, Pitchbook.
Notes:
1. U.S. M&A Activity includes closed deals with U.S. targets only; excludes real estate transactions.
2. YTD as of June 30 of 2020 and 2021, respectively.
3. LTM as of June 30, 2021; four quarter rolling median.
Commentary
▪ The value of M&A transactions completed in the
U.S.(1) in the YTD period ended June 30, 2021 was
$661.4 billion, an increase of 30.2% from the
comparable period in 2020. Further, the number of
M&A transactions completed in the U.S. in YTD
through June 30, 2021 increased by 29.8% from the
comparable period in 2020.
▪ The median TEV / EBITDA multiple for U.S. M&A
transactions for LTM ended June 30, 2021
increased to 13.0x.
▪ The median Total Debt / EBITDA multiple for U.S.
M&A transactions for LTM ended June 30, 2021
increased to 6.6x.
U.S. M&A Activity (1)
U.S. M&A Multiples
Dry
Po
wd
er
($ i
n B
illi
on
s)
(3)
Deal
Valu
e (
$ i
n B
illi
on
s)
Deal V
olu
me (#
in A
ctu
als
)
(2)(2)
Member FINRA / SIPC
Market
Insights
7.4x
8.8x
10.2x
7.7x
5.2x
9.8x
1,722
1,704 2,061
1,959 853
1,143
-
1,000
2,000
3,000
4,000
5,000
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
18.0x
2017 2018 2019 2020 YTD2020
YTD2021
12.4x13.1x 12.9x
14.5x
11.9x10.9x
1,251 1,163 1,360 1,333
547 828
-
1,000
2,000
3,000
4,000
5,000
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
18.0x
2017 2018 2019 2020 YTD2020
YTD2021
7.1x
10.0x
11.7x
13.8x14.9x
8.9x
1,575
1,508 1,754 1,652
682 1,002
-
1,000
2,000
3,000
4,000
5,000
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
18.0x
2017 2018 2019 2020 YTD2020
YTD2021
8.1x9.2x
8.6x
7.2x
9.0x 9.4x
1,330 1,383 1,475 1,337
566 759
-
1,000
2,000
3,000
4,000
5,000
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
18.0x
2017 2018 2019 2020 YTD2020
YTD2021
Deal V
olu
me (#
in A
ctu
als
)
TE
V /
EB
ITD
A
Deal V
olu
me (#
in A
ctu
als
)
TE
V /
EB
ITD
A
U.S. M&A Trends by Industry
7
Healthcare Industrial / Manufacturing
Business Services Consumer
TE
V /
EB
ITD
A
Deal V
olu
me (#
in A
ctu
als
)
TE
V /
EB
ITD
A
Deal V
olu
me (#
in A
ctu
als
)
Source: S&P Capital IQ.Note: YTD as of June 30 of 2020 & 2021, respectively.
Member FINRA / SIPC
Market
Insights
9.8x11.1x 11.6x
15.0x
8.6x
20.2x
356 340 395 261 115 170
-
1,000
2,000
3,000
4,000
5,000
0.0x
3.0x
6.0x
9.0x
12.0x
15.0x
18.0x
21.0x
24.0x
27.0x
2017 2018 2019 2020 YTD2020
YTD2021
U.S. M&A Trends by Industry (Continued)
8
Leisure & Entertainment Technology / Media / Telecom
Source: S&P Capital IQ.Note: YTD as of June 30 of 2020 & 2021, respectively.
16.0x16.9x
16.0x
14.4x
9.9x
12.1x
1,836 1,866 1,953 1,810
772 1,125
-
1,000
2,000
3,000
4,000
5,000
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
18.0x
2017 2018 2019 2020 YTD2020
YTD2021
Deal V
olu
me (#
in A
ctu
als
)
TE
V /
EB
ITD
A
TE
V /
EB
ITD
A
Deal V
olu
me (#
in A
ctu
als
)
Member FINRA / SIPC
Market
Insights
Definitions & Disclosure
9
Disclosure:The information contained in this report has been compiled from publicly available sources; it is not a research report and is provided for informational
purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any
particular trading strategy. The information contained herein is believed by Genesis Capital to be reliable, but Genesis Capital makes no representation as to
the accuracy or completeness of such information. Genesis Capital may act as advisers to, have positions in and effect transactions in securities of
companies mentioned herein and also may provide, may have provided, or may seek to provide services for those companies. In addition, Genesis Capital
or their respective officers, directors and employees may hold positions in the securities, options thereon or other related financial products of companies
discussed herein. This is provided as informational only and is not a solicitation for investment in any security whatsoever. Any investment by any investors
must be made using their own investment decisions and criteria using their own independent financial advisors. Also, past performance is not necessarily
indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Genesis Capital’s prior
written consent. Sources of information include but are not limited to, Mergermarket, Pitchbook, Preqin, and S&P Capital IQ.
▪ Last Twelve Months (LTM) — Timeframe of the immediately preceding 12 months.
▪ Year to Date (YTD) — Period of time beginning the first day of the current calendar year or fiscal year up to the current date.
▪ Total Enterprise Value (TEV) — Equity Value (fully-diluted shares outstanding x current market share price) + market value of debt + minority interest -
cash and equivalents.
➢ TEV may include payments to seller(s) in cash or stock, the present value of notes or similar instruments, net long-term debt assumed by a buyer,
and appropriate adjustments for other assets retained by a seller or liabilities assumed by a buyer.
▪ Total Debt — Short-Term Debt (interest-bearing liabilities due in 12 months or less, including, but not limited to, short-term bank loans and lease
payments) + Long-Term Debt (interest-bearing liabilities with a maturity date longer than 12 months, including, but not limited to, bonds, lease payments,
term loans, revolving lines of credit, and notes payable).
▪ EBITDA — Earnings Before Interest, Taxes, Depreciation, and Amortization. It is calculated as: Net Income + Interest + Taxes + Depreciation +
Amortization.
▪ Special Purpose Acquisition Company (SPAC) — It is formed strictly to raise capital through an initial public offering for the purpose of acquiring an
existing company.
▪ Dry Powder — Capital/funds raised by private equity firms that are available to be invested.
▪ Middle Market — Companies having Total Enterprise Values between $10 and $250 million.
▪ Middle Market Financial Sponsor — A Private Equity firm which invests in companies with Total Enterprise Values between $10 and $250 million.
Definitions: