BGL Metals Insider: Tax Reform to Boost M&A
April 19 2018
Chicago, IL – April 19, 2018 – Mergers and acquisitions activity in the Metals industry could see a boost from tax reform, with the recently implemented corporate tax rate reduction stimulating business investment, according to the Metals Insider, an industry report released by Brown Gibbons Lang & Company. Tax cuts are making expansion through acquisitions more attractive, injecting positive momentum into the M&A market.
Liquidity remains high, with corporate balance sheets flush with cash and debt financing capacity ample to fund acquisitions. The need for acquisition-driven growth among public buyers is keeping M&A multiples for healthy companies strong.
Recent tax legislation has incentivized corporations and other strategic buyers to “buy” versus “build”. Buyers are taking advantage of today’s tax savings window to tap cash flows from acquisitions sooner, and with lower after-tax return hurdles can pay more for quality assets, potentially increasing valuations.
Manufacturing has been particularly active as participants seek value-added capabilities to capture margin. AK Steel’s $360 million acquisition of Precision Partners, which specializes in lightweighting and complex metal components, expands its value proposition in the automotive market, fetching a premium valuation at approximately 7x adjusted 2017 EBITDA. Park-Ohio acquired Canton Drop Forge, a maker of custom closed die forgings and components, to increase its presence in the global aerospace market. Service centers continue to pursue service line and geographic expansion. Ryerson, Olympic Steel, Russel Metals, and Samuel, Son & Co. each announced bolt-on acquisitions during the last six months.
BGL publishes periodic Insider research publications on a variety of industries including automotive; building products and construction materials; business services; consumer and retail; environmental and industrial services; healthcare and life sciences; industrials; metals; and plastics and packaging. Download BGL Insider reports at www.bglco.com/research.
About Brown Gibbons Lang & Company
Brown Gibbons Lang & Company is a leading independent investment bank serving the middle market. BGL specializes in mergers and acquisitions advisory services, debt and equity placements, financial restructuring advice, and valuations and fairness opinions, with global industry teams in Business Services, Consumer & Retail, Environmental & Industrial Services, Healthcare & Life Sciences, Diversified Industrials, Metals & Metals Processing, and Real Estate. BGL has offices in Chicago, Cleveland, Philadelphia, San Antonio, and San Diego in addition to Global M&A partner offices in more than 50 countries across 5 continents. BGL is able to deliver to our clients unparalleled access to strategic relationships, investors, and opportunities globally. For more information, please visit www.bglco.com.