Roundtable: Mergers and acquisitions.

• Author: Malan, Mekenna

This month, Utah Business partnered with Dentons Durham Jones Pinegar to host a roundtable event featuring local finance and business leaders. Moderated by Serene Papenfuss, principal at Kickstart, the group discussed recent trends in the M&A space, the advice they give their clients, predictions for 2023, and more. Here are a few highlights from the event.

What are your thoughts about MSA trends in Utah, and have you seen a shift since Q2?

Joshua Little | Executive Committee Member & CFO | Dentons Durham Jones Pinegar

Definitely a shift since Q2. A year ago, we were probably at 150 percent of capacity, but the thing is, we're probably still at 80-90 percent of capacity. We're still busy. We're definitely not scrambling like we were a year ago. I think Utah's a little bit more active than other places I've seen.

Samuel Orme | Managing Director--Global Investment Banking | Bank of America Merrill Lynch

M&A has been solid. It's been keeping the lights on because the capital markets--both IPOs and secondaries, and even leveraged finance--have been down, given the blip we had in 2021. The blip was because everything was working: revenues were working, growth was working, and leveraged finance was working. I think Utah skews tech and consumer, especially with direct-to-consumer businesses. Both of those are down compared to what I would call generic industrial/business services/energy. Those are the industries that have been performing.

Do you see similar patterns on the buy-side and sell-side?

Flavia Rydin | VP | Silicon Valley Bank

I've seen some companies that are willing to go out to market and have a transaction this year, and after Q1 or Q2, realize they couldn't get the evaluation that they wanted to get. Some operators are now holding tight and continuing to build their balance sheets because the markets will open back up and be more opportunistic probably in the latter half of 2023. I think there's still a positive outlook, but that volume obviously has slowed down, and operators are not going to get exactly the valuations that they got back in 2022, 2021, and late 2020.

Ryan Hemingway | Managing Director | EPIC Ventures

I've got two right now that are in some acquisition discussions. One's kind of non-tech, one's tech, and these would be sub-$100 million. From the valuation side, both are lower than some indications we had last year at this time. The other piece is that both of these are very strategic--the buyers, in this case, are looking for strategic value in ROI specifics, and it's very focused either as vertically strategic or as horizontally strategic. As far as deal terms, I don't believe the increased cost of capital is affecting either of these significantly, but I do think it's opened up some discussions to some more creative structures.

Is anyone else seeing creative structuring in order to be able to fund deals?

Tara Rosander | EVP M&A--Diligence & Integration | Brandless

We're acquiring companies in the health and wellness space, and most of them are sub-$50 million. So we are certainly focused on earnout now and getting a little bit...