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Money: Deals dip in Florida amid squabbles over price
By Brian Bandell
May 30, 2014
The number of private equity firm investments in Florida-based companies declined in 2013 as haggling over pricing made finalizing deals difficult.
Miami-based investment banking firm Cassel, Salpeter & Co. analyzed private equity activity in Florida using data from Pitchbook. There were 135 private equity investments in local companies in 2013, down from 146 in 2012. That’s still better than the 113 deals during the 2009 financial crisis.
During the Great Recession, many of the private equity investments in Florida were in struggling firms at discounted prices, but now companies are doing better, said James Cassel, chairman of Cassel, Salpeter & Co.
“There’s somewhat of a disconnect on value between sellers and buyers,” he said. “There is so much competition for deals and, in some cases, they aren’t willing to pay the prices others are willing to pay.”
In order to justify purchasing a company for well above its book value, a private equity firm must know it could get a strong return down the road, Cassel said. With interest rates likely to rise, that means adjustable-rate loans tied to company acquisitions should be paid off as soon as possible – otherwise they’ll become more expensive, Cassel said.
Companies in the IT and health care industries have been acquired for strong multiples of their book value, he added.
Lately, Cassel’s firm has been busy working for Florida companies looking to sell. Meanwhile, he found the number of Florida-based private equity firms has grown from 26 in 2010 to 33 in 2013.