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10 transaction comparables for the specialty finance sub-sector of the financial services industry in North America in the last 16 months. Specifically, acquisitions under $500m in Enterprise Value. Looking for EV/EBITDA multiples, EV/BookValue multiples and all other information per transaction.
Hello! Thanks for your question about transaction comparables in the specialty finance sector. The short version is that in May 2016, Platinum Equity, LLC acquired Electro Rent Corporation at a transaction value of $875 million, 1.72 times its Enterprise Value to Book Value. In July 2017, General Finance Corporation acquired Royal Wolf Holdings Limited at a transaction value of $70.7 million, 1.16 times its Enterprise Value to Book Value. Due to the inherent limitations stated in the methodology, I adjusted my research scope so as to provide at least two financial metrics of each M&A transaction involving specialty finance companies and compiled the data on this spreadsheet. Below you will find a deep dive of my findings.
METHODOLOGY
To complete this request, I reviewed the following sources: Corporate websites, Industry reports, Trusted media sites, and Regulatory Filings. Notably, there is limited publicly available data on M&A transactions involving specialty finance companies. Deloitte's quarterly reports, Q4 2016, Q1 2017 and Q2 2017, and the Bryant Park Capital Q1 2017 quarterly report clearly depict the situation. The reports only list the transaction parties, date and price or asset value. No data on multiples is provided.
I only came across two recent reports, both from one company, William Blair, that provided details on transaction multiples of M&A transactions of specialty finance companies. While the two market reports, August 2016 and October 2017, provide some data on transaction multiples, a significant number of the transactions have data gaps on the same. This trend of limited financial disclosure could be as a result of most of the private nature of most specialty finance companies.
Inversely, the reports have detailed information on publicly listed specialty finance companies. Both the Bryant Park Capital and William Blair reports have information on market performance, operating and valuation metrics. The data could be complementary to that on M&A transactions.
FINDINGS
Due to the inherent limitations stated in the methodology, I adjusted my research scope so as to provide at least two financial metrics of each M&A transaction involving specialty finance companies. Additionally, due to limited deal volume and availability of information, I included some transactions whose transaction price was above USD 500 million. I compiled a list of 10 comparable acquisition transactions involving specialty finance companies in North America on this spreadsheet. Of the 10, 3 of them had transaction prices above USD 500 million. Except for a single transaction, all other transactions had a transaction price and the EV/BookValue multiple.
CONCLUSION
To wrap it up, in May 2016, Platinum Equity, LLC acquired Electro Rent Corporation at a transaction value of $875 million, 1.72 times its Enterprise Value to Book Value. In July 2017, General Finance Corporation acquired Royal Wolf Holdings Limited at a transaction value of $70.7 million, 1.16 times its Enterprise Value to Book Value. I compiled a list of 10 comparable acquisition transactions involving specialty finance companies in North America on this spreadsheet.
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