I think the caveat, it’s a fair point that you make, is that public company M&A is generally being rewarded, but it has to be strategic and in the zone. You know, vast departures from the core, kind of experimental, new segments that you know, investors are a lot more discerning. And the flip side of this, and this totally is consistent with that, yes, there’s a green light for M&A, but it should be in kind of your power lanes, is that, you know, we’re seeing from large, diversified companies a continued trend towards portfolio simplification. Carrier streamlined its portfolio with fire and security and commercial refrigeration.
Previously, he structured high yield financings, leveraged buyouts, and restructurings as a Director at UBS Investment Bank. Prior to UBS, he worked at Moelis & Company and Deutsche Bank. He received his BS in Business from Indiana University’s Kelley School of Business.
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- They probably, you know, as the pendulum always goes, kind of overdid it in terms of building up cash and getting themselves ready.
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Q: How has deal making changed over the last 10 years?
Combined with, you know, healthy employment rates. In theory, this is nirvana for the housing sector and construction related sectors. This is what people have been waiting for years. It’s shown joshua rosenbaum rbc in the public equity markets, where, you know, multiples are looking ahead.
He originates, structures, and advises on M&A, corporate finance, and capital markets transactions. He is also the co-author of The Little Book of Investing Like the Pros. RBC Capital Markets is a global investment bank providing services in banking, finance and capital markets to corporations, institutional investors, asset managers and governments globally. I think the tone and the sentiment from being in the meetings with a number of clients was a lot more about conversations around key strategic topics.
How does Clay compare to other personal CRMs on the market?
And I think, you know, there’s all the conditions exist and look like they’re going to exist going into ‘25 for a continued strong market there. I mean, the other piece we always talk about Josh is just trying to make sure that even large private equity assets have multiple alternatives, and one of them that you mentioned earlier that it’s been great to see that market revive the bid is on the IPO side. I think there was a an appetite out there for a strong industrial business like this, especially in aerospace and defense. Maybe give me some thoughts on the IPO market and how you’re seeing it as a true alternative for some of our clients that are thinking about monetizations. Why don’t we get into the private equity topic? We certainly are seeing probably the highest level of service in terms of number and value of portfolio companies sitting in private equity portfolios.
More activity by Joshua
- He received his AB from Harvard and his MBA with Baker Scholar honors from Harvard Business School.
- If corporates deem it strategic and they have cash on hand and a cheaper cost of capital, they could stretch more.
- And, you know, like the IPO markets, like, you know, vast segments of the financial markets.
- Joshua Rosenbaum is a distinguished professional with a strong educational background and extensive experience in the financial industry.
And I think, you know, the comfort of adding in their lane is important. Now, you made the point as we think about the election that’s coming up. I do think if we’re looking at folks that are considering something larger and more strategic like that, they’d like to understand where regulatory policy is going on a go forward basis, to get greater comfort. But also, look, we’ve talked about it, and we’ve maintained a dialog with the different agencies on that topic. Their focus is on the larger conglomerates. I think there’s good strategic transactions are getting done, and certainly they’re getting a more extensive review, but they’re getting through those processes, and we are helping a lot of clients manage those.
Divestiture deals suggest the way forward
It’s shown in the debt yields for some of these names. The flip side of this is that it takes a while for these interest rates, for lower interest rates, to kind of trickle their way into the broader economy and show up at financial results. But like I said, you know, the 10-year has remained stubbornly high. You know, mortgage rates are still north of 6% so this needs months, quarters, to get into the economy before people are going to see it in increased volumes. But the setup is there, the backdrop is there, which is why the equity markets, which obviously look forward, you know, are valuing it. And I think, you know, coming back to M&A and the M&A environment, I think the management teams, the board members, the people that have been in industry for a long time, recognize this favorable backdrop setup.
Banking
So thank you for the conversation and look forward to having you back. Well when you think back to roughly a year ago, when we last had a sit down post our annual industrials conference in terms of the state of the world, as I was reflecting on this, there’s been significant progress. You know, at that time, we’re talking September, October of 2023 you had a 10 year that was at 5%, you had very stubborn inflation, you kind of had a macro backdrop, the likes of which most people hadn’t seen in their professional careers. We really didn’t have a functional LBO market. So today, you know, we have a vibrant M&A market. It’s still more, I’d say, a corporate environment than a private equity environment, but private equity is increasingly active.
Economics for Financial Advisors
And I would say the exit activity has been slower. We’ve seen some decent activity in terms of new entries. And so there’s starting to be somewhat of a constructive LBO market, although I would say we’ve seen green shoots, and we’ve been participants in it, but it’s also early days. But, you know, give me some perspective of what you’re hearing from the private equity clients, both in terms of newer transactions that they’re looking at, but also in terms of how they’re considering transactions on the exit side. And I think, you know, Josh, you and I have always said, like, once we get to a constructive market from a financing perspective, we’re going back to regular way. LBOs versus continuation funds or minority sales or the like that are going on a bit more these days.
And the valuations show that both the transaction valuations as well as the public comps. The last area, and it’s a little bit of a catch all, you know, we tend to call diversified industrials, which itself is incredibly diverse. Some headwinds, some things related to, global supply chain.
Industrial Deal-Making: What a Difference a Year Makes
They’re staying in there longer than they have historically. We talked about it last year, there being a pent up demand for deals, both in terms of new transactions and in terms of exiting from existing deals. And that’s continued to be the theme, I would say, if I look at it, you know, there was an abnormal amount of private equity exit activity from the second half of ‘20 into all of ‘21 those 18 months were the most we’ve seen in a long period in history, I believe.
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There is a real backlog forming, and I think the setup and the backdrop is getting there. And I think we are going to see much more broader participation in the industrials IPO market heading into ‘25 which is great. So I think there are going to be a lot of private equity firms that are going to look to this IPO market. And, you know, like the IPO markets, like, you know, vast segments of the financial markets. You know, once one person goes kind of clears the way.
