A recent article on pr.com detailed a report put out by Madison Street Capital covering the state of the Mergers and Acquisitions market. In the report Madison street detailed the current rise in mergers and acquisitions market, then detailed some of the reasons for the increase.
The report by Madison Street Capital showed that 42 deals were either announced or closed by hedge funds in 2015. That is a marked increase from the 32 reported 2014. The transaction volume also reportedly increased by 27 percent over the same period of time. The surge in activity in the fourth quarter of 2015, along with several other factors, are creating significant deal making momentum, indicating 2016 could be record breaking year for merger and acquisitions activity by hedge funds.
Assets held by hedge fund are at record highs even though most hedge strategies only had a mediocre performance in 2015. This is because despite the lackluster performance of the hedge funds institutional investors are eagerly investing in merger and acquisition deals.
Institutional investors are making these allocations in the sector with hopes of getting higher returns required to cover their increasing liabilities. At the same time, many managers of smaller hedge funds are finding it increasingly difficult to attract new investment capital causing the portfolio to operate below optimal capacity. Managers are dealing with pressure to lower fees, while simultaneously incurring higher operational costs. As a result of these factors, hedge fund managers are considering alternative strategies.
Karl D’Cunha, Senior Managing Director at Madison Street Capital indicated the environment for deal making will be even stronger in 2016 than in 2015, with many different deal structures used to make accommodations for both buyers and sellers. Revenue share stakes, incubator deals, profit and earnings stakes and bolt-on deals along with traditional merger and acquisitions are some of the ways these deals are being structured.
Madison Street Capital which was founded in 2005 is a leading middle market investment banking firm with offices around the world. Madison Street provide financial services in a variety areas such as business valuation, corporate advisory, valuation for financial reporting purposes and financial opinions.
Madison Street provides merger and acquisition advisory services for their clients including providing the true value of the company in question. Finding the true value of the company is essential before any mergers and acquisitions activity can proceed because it provides a clear understanding of the companies worth and future prospects.
Madison Street Capital is headquartered in Chicago, Illinois and maintains offices in Africa and Asia. With these offices the company has the extensive relationships to provide clients, both buyers and sellers, with the best match for their particular business needs.