Opus Connect's M&A Insights

Deal Announcement

Opus Connect is delighted to highlight a significant transaction in the insurance sector involving H.W. International B.V., thoroughly led by Steven H. Nigro from TAG Financial Institutions Group. This deal exemplifies the crucial role of precision and insight in the dynamic insurance industry, showcasing how strategic connections and informed decision-making can lead to successful outcomes.

We’re proud to continue bringing industry leaders together and to celebrate significant transactions within the M&A community.

Furthermore, investments in the U.S. insurance industry are essential for stabilizing the financial system and driving economic growth. Insurers' substantial capital investments across various sectors enhance market liquidity and foster confidence, which in turn stimulates further investment and innovation. As the industry continues to evolve with technological advancements and regulatory changes, these investments adapt, ensuring the ongoing economic sustainability of the sector.

Economic and M&A Insights

“Black Monday” Could Trigger An Economic Recession

On August 5th, international markets experienced a significant downturn due to rumors of an economic slowdown in the US, with drops of up to 5% in stock markets. This "Black Monday" saw notable declines in the Dow Jones, Nasdaq, and S&P 500, exacerbated by a collapse in the Japanese market. Despite these challenges, markets began to recover towards the end of last week.

Comment: The downturn in global markets on August 5th, triggered by fears of a U.S. economic slowdown, could impact the M&A sector. Significant stock index declines indicate potential recession risks, making firms more cautious in M&A activities. Despite some recovery later in the week, the ongoing economic uncertainty may drive conservative strategies in M&A, with opportunities for acquiring undervalued assets.

Major Banks Moving From New York To Dallas

Goldman Sachs is building a new office tower in Dallas that will house about 5,000 employees. Similarly, JP Morgan already employs around 12,700 people in the same city and now has more employees in Texas than in New York. Wells Fargo and Charles Schwab have plans to allocate more employees in Dallas.

Comment: The trend of major financial firms like Goldman Sachs, JP Morgan, Wells Fargo, and Charles Schwab expanding their presence in Dallas highlights Texas' attractiveness due to favorable tax policies and business-friendly environments. This shift is likely to influence the M&A market significantly, as these companies may look for strategic acquisitions to bolster their new regional hubs.

Texan Private Equity Firm Acquires Energy Sector Leaders

Pelican Energy Partners, a private equity firm based in Houston that specializes in energy services and equipment companies, has acquired Electrical Builders Industries. Based in Minnesota, this service provider is dedicated to critical system electrical bus duct installation, replacement, and repair.

Comment: Pelican Energy Partners' acquisition of Electrical Builders Industries underscores the expanding M&A opportunities in Texas's energy sector. With its robust infrastructure and business-friendly environment, Texas is becoming a strategic hub for firms aiming to consolidate and expand their energy services portfolios. This trend points to increased investment and consolidation in the region, particularly for companies specializing in essential energy maintenance and enhancement.

Opinion Article

How Do Investment Bankers Screen For Healthcare Deal Quality?

By Bill Bowler, Sales & Business Development Associate at Opus Connect

Learn about the key considerations investment bankers screen for in assessing healthcare deal quality, from relationship building to due diligence and metrics.

There are numerous factors that an investment banker must consider when screening for healthcare deal quality. Each phase of the deal process has its own unique characteristics, oftentimes starting long before a deal comes to market. Some key considerations for investment bankers in the healthcare space include relationship building, evaluation of the management team, due diligence, and company metrics.

Developing a Relationship and Evaluating the Management Team

A crucial aspect of screening for healthcare deal quality is relationship building. Erv Terwilliger of Tower Partners emphasized “I think trust is built over a long period of time, helping the owner think about things they haven’tthought of. We like building relationships with people before they know they want to go to market, helping them to think it through. I’d rather start havinga conversation a year or two before they’re ready to sell - this allows us to get prepared and plan more effectively.” Evaluating the management team isalso vital. Steve Higgins of Delancey Street Partners, LLC stated that “A lot of it comes down to the quality of the management team. Are they able to articulate a compelling story about the business?

The Due Diligence Process

The due diligence process in screening for healthcare deal quality also requires a disciplined approach. Lana Simkina of Eureka Capital Partners, LLC shared, “We do a lot of detailed due diligence to understand value drivers and the business model along with potential risks and the competitive environment. We believe that upfront diligence is very important so that the company is properly positioned for the buyer universe. Depending on our clients’ objectives, we focus not only on price but also on other critical deal terms such as owner’s equity rollover, deferred compensation, indemnification provisions, and other terms in a sale and purchase agreement.” Higgins added “The other thing is the quality of financial information. Do they have reviewed statements and an annual budget where they track and monitor progress against that budget? That would suggest a level of sophistication that is required in order to actually get through an M&A process.”

Need for Metrics and Risk Evaluation

Metrics also play a crucial role when assessing healthcare deal quality. Jared Behnke of Transitus Capital said “We’re looking for healthy businesses and we have some basic metrics we’re looking for to understand where the business has been. We’re going to ask for basic financial statements over three years. We’re also going to ask for some detail on potential customer concentration and vendor concentration to understand where potential pitfalls might be and where an acquirer might view it as a risky business.”

By focusing on these critical factors – relationship building, evaluation of the management team, due diligence, and key metrics – investment bankers ensure they screen for healthcare deal quality thoroughly and effectively.