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Mergers Good for Idaho Firms
By Brad Carlson

© 2006 Idaho Business Review. All rights reserved.

Merger-and-acquisition volume is on pace to break the record from 2000, Boise business finance specialist Meg Carlson reports.

Strong volume and increased competition encourages many players to seek buyout opportunities in new geographic markets and smaller geographic markets.

That bodes well for privately held businesses in the Intermountain West, Carlson states in her quarterly Privately Held Company newsletter.

"Plentiful cash in corporations and private equity groups is driving this deal market, with record levels of fundraising continuing in 2006," Carlson wrote. "Time is a competitive advantage as companies increasingly acquire - to increase revenues and profitability, gain geographic reach and/or add complimentary products."

Owners continue to receive good prices for their businesses, she wrote.

"Buyers are demonstrating greater sophistication as there is little margin for error," she wrote.

Analysts expect the technology sector to produce the most mergers in the second half of the year, followed by health care/life sciences and manufacturing/distribution, Carlson wrote.

Private equity groups remain most enthusiastic about middle-market buyouts, followed by small-business acquisitions and early stage venture-capital deals.

In an interview, Carlson said the Boise area has business-services companies attractive to prospective buyers.

Traditional manufacturing and distribution businesses are popular among buyers, and she said opportunities exist in health care and life sciences, though they're harder to come by in Boise than in some larger markets.

Private equity and leveraged buyout groups should remain active for the next two to three years, Carlson said.

Balance sheets improved last year, and investors continue to seek places to invest and over-abundance of capital raised before the economic downturn several years ago, she said, citing a recent Piper Jaffray report.

Carlson is a former Ore-Ida executive and is a current principal in the Boise firm The C&H Group. Sources cited in the newsletter include a Thompson Financial/ACG survey from June 20, M&A Today (February 2006), the Wilmer Hale law firm and a Valuation Strategies article by Orchard Partners Inc. President Joel Johnson.

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