Beacon Corporation: 2017 – Year in Review
TORONTO, JANUARY 16, 2018
The year 2017 was filled with an unprecedented amount of transaction activity, both within the M&A market and within our organization. Low interest rates, which reduced the cost of capital, combined with increased economic performance, contributed to significant increase in acquisition and business transaction activity. At Beacon, a record number of mandates and completed deals brought significant organizational growth that is poised to continue into 2018.
Throughout the 2017 calendar year, Beacon completed 11 transactions, most notably the sale of Affinity Electronics of Canada to Drexel Industries in November, as well as the sale of GroceryMarket.ca to Longo’s delivery service GroceryGateway.com. These types of transactions brought new challenges which were met head on by the Beacon team. The success of these deals reaffirmed Beacon’s position as one of Canada’s leading M&A advisory firms in the mid-market sector. This was echoed in December of this year, when Beacon was engaged by a specialty infrastructure contractor, with revenues exceeding $29,000,000.
The completed transactions in 2017 were distributed across six industries that include medical & health, distribution, manufacturing, IT, consumer products, and food processing. Transaction revenues of businesses sold were a cumulative $78,400,000 with a combined earnings before interest, taxes, depreciation and amortization of $12,700,000. Of the 11 buyers in Beacon’s completed transactions, private investors accounted for 5 of the total, with 3 industry buyers and 3 financial purchasers.
Beacon continued to expand its team in 2017 in order to handle the increased demand for transaction advisory and valuation services. Ms. April Harbottle and Mr. Duncan Macpherson were brought on to expand Beacon’s geographic reach and expertise.
Ms. Harbottle was brought on in May of 2017 and brings a wealth of financial services and technology experience. She has had an extensive career in banking, with roles in corporate finance, as well as technology and regulatory mandates prior to Beacon. Based in Hamilton, Ontario, April has expanded Beacon’s reach and is well equipped to handle the unique needs of corporations located within the Hamilton-Niagara regions.
Mr. Macpherson joined Beacon in November of this year after a 20 year career in franchising. In addition to buying and selling his own franchise, he also held the position of Vice President, Franchise Development for two of Canada’s leading franchise brands. With his expertise, Duncan allows Beacon to delve into the realm of franchise sale and resale opportunities with a focus and understanding of the differences in comparison to independent businesses.
The mid-market M&A industry is expected to see an acceleration in activity into 2018, with both transaction volume and size increasing. This increase is to be driven by the positive outlook of private equity on the middle market sector, as well as valuation multiples remaining favourable.
Valuations in the private markets have reached high levels, with multiples for mid market corporations at pre-financial crisis levels. Combined with rising interest rates, this puts a downward pressure on potential returns and the ability to absorb any unforeseen risks. This leaves little room for error, making due diligence and deal selection critical. In order to ensure a deal is successful, it is crucial for participants to be effective in these areas, as well as have an accurate understanding of their business valuation.
As one of Canada’s premium lower mid-market Merger and Acquisition advisory firms, Beacon specializes in transaction advisory and valuation of companies with revenues of $1 to $50 million. We are a one-stop shop and provide our clients with all the services they need when selling a business from valuation, to confidential marketing, negotiation and closing procedures. Beacon Corporation looks forward to continue serving the Canadian middle market into the coming year.
If you are considering selling a business or are interested in one of our current businesses for sale opportunities, get in touch with us. For additional information, please fill out the Contact Us form.