Flow of private equity deals in Florida slows

By: Nina Lincoff
September 8, 2015

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Private equity deals slowed in the first half of 2015, according to a report from Miami-based Cassel Salpeter & Co.

The flow of private equity into Florida is slowing after a record number of deals in 2012, according to a recent report from Miami-based investment banking firm Cassel Salpeter & Co.

Just 75 private equity deals closed in the first half of 2015, compared to a record 180 in 2012, 175 in 2013, and 199 in 2014.

The lower volume of private equity deals doesn’t necessarily mean that the alternative lending source has dried up in Florida, said James Cassel, chairman and co-founder of Cassel Salpeter & Co.

“It’s hard to really say that it’s a trend. We’ll have to see how it plays out over the last six months of 2015,” Cassel said. “There are still all of the factors that inspire deal flow, expect for one. The availability of quality companies, because they did their deals in 2014.”

It’s possible the market is normalizing after an over-saturation of available deals.

“Even if they are slowing down, it’s not because of the economy. They are not slowing down because they ran out of money,” Cassel said. “They are slowing down because there aren’t deals on the market.”

However, for the companies still looking to close private equity deals in Florida, 2015 and early 2016 is the time to do it, Cassel said. “One of the driving forces is interest rates, because we all know interest rates are going to go up. They’re just not sure which quarter,” he said. Smart companies are looking to close deals before the Federal Reserve hikes interest rates.

“Interest rates will effect valuation, because as interest rates go up, you’ll be able to leverage a little less,” Cassel said.

Other factors that contribute to a wealth of private equity deals include an increase of firms in-state and an overall healthy economy. In the first half of the year, four new Florida-headquarter private equity firm popped up, bringing the total in-state to 41, according to the report. In all of 2014, just three new firms headquartered in Florida.

In terms of industry, business-to-business deals compromised the largest part of Florida private equity deal flow in the first half of the year at 36 percent, followed by business-to-customer at 18.7 percent, and then health care, IT, financial services, and materials and resources, respectively.

The report considered all private equity investments including buyouts, growth, investment in public equity, recapitalization and add-on.