McGladrey Capital Markets continues to close deals amid financial crisis

Costa Mesa, Calif. – December 24, 2008 – Although the frigid financial climate has impacted all facets of M&A deal activity, global middle-market investment bank McGladrey Capital Markets LLC continues to successfully close transactions. Investment bankers at the firm have concluded five middle-market M&A deals within the last twelve days alone. All five had private equity components.

“We expect to close as many deals this December as last December, which seems remarkable under such a stressful lending market,” says Hector J. Cuellar, president. “We did see a slowdown in November, as the financial meltdown took a toll, but the activity has returned this month, and we’re on track to close about as many deals this year as in 2007."

Given today’s financing environment, the recent flurry of closed deal activity is a testament to the firm’s ability to seek out solutions and manage transactions to a close under very difficult conditions. “It’s been a challenge up until the final hour on many transactions this week,” Cuellar says. “But our clients are pleased with the results so far.”

The firm has also signed six sell-side engagement agreements and three buy-side engagement agreements within the month of December so far, signaling continued deal activity in 2009.

M&A isn't the only area where the firm is seeing activity. Demand for restructuring and capital raising services is on the rise. Liquidity concerns have led companies to reach out for the firm’s financing expertise within the past month. "As the credit market becomes tighter, lenders are increasingly looking to trusted, established relationships," Cuellar says. "And that makes having the right investment banking team on your side all that much more important."

Some sectors are slowing: consumer discretionary sectors and cyclical industries aren't expected to see as much deal activity until signs of consumer confidence recover. Industries such as healthcare, technology and defense, however, remain popular targets for deals. “Good deals continue to happen, both for strategic and private equity buyers,” Cuellar says.

McGladrey Capital Markets leads negotiations as Ancor Capital Partners and Merit Capital Partners acquire Tom Cat Bakery

Costa Mesa, Calif. – December 18, 2008 – Tom Cat Bakery, Inc., an artisan bread and sweet goods commercial bakery located in New York, was acquired today by Ancor Capital Partners and Merit Capital Partners. Transaction terms were not disclosed.

McGladrey Capital Markets initiated the transaction, sourced the buyer, led the negotiations and acted as exclusive financial advisor to Tom Cat Bakery. New York-based Lowenstein Sandler PC acted as the legal advisor to Tom Cat Bakery and Hunton & Williams LLP in Dallas served as lead deal counsel for the buyers.

This is the third transaction McGladrey Capital Markets has closed in the past week.

U.S. gas pipeline infrastructure: take-away tug of war (from Oil and Gas Investor)

Rising U.S. gas production has producers and pipeline developers
scrambling for new take-away capacity against a backdrop of dicey financial
markets.

“There has been an unprecedented amount of domestic spending on pipeline infrastructure over the last couple of years, by a factor of six,” says Mike Parham, managing director of Costa Mesa, California-based McGladrey Capital LLC, an investment-banking firm.

“The real pipeline growth areas seem to be in Alaska, the Midcontinent and the Rockies,” he says. “But I don’t want to underestimate even West Texas, New Mexico and some of the Permian Basin. Across the board, the industry spent about $12 billion nationwide this year, compared with about $6 billion last year. And only about $2 billion in 2006.”

How will new projects be funded? “That’s the big question. I think the MLPs are a likely source,” says Parham. “They have to put their money into projects like these and I think they will also raise more capital, although the markets aren’t being very friendly right now. Also, in this market, mezzanine funding is going to play a big role.”

In fact, due to the rattled global financial system, Parham sees institutional money making a flight to safety, as well as private-equity capital that historically wouldn’t touch energy, and hedge funds, all turning to energy and infrastructure-related investments.

Also, pension funds are directly investing in infrastructure for long-term income. “In the past, the cyclicality of the industry spooked a lot of these types of investors,” says Parham. “But now, it is the rest of the market that is spooking them.

“They are seeing that the long-term trend for infrastructure is quite positive. We have an archaic grid and a tremendous need for pipelines. We need an extreme makeover. I can’t find another industry where a dollar should be invested, other than in energy.”

Buyers are still on the prowl for deals (from Crain's Chicago Business)

...Private companies changing hands a year or two ago were typically valued at six to eight times earnings before interest, taxes, depreciation and amortization. The same companies today are priced closer to four to six times EBITDA.

"In 2006 and 2007, financial buyers were often outbidding strategic acquirers in the small- and middle-M&A market," says Brian Boyle, senior managing director of McGladrey Capital Markets LLC in Chicago, a business brokerage. "Now the pendulum is swinging back. Strategics are gaining the advantage."...

McGladrey Capital Markets leads negotiations as Halltech completes management-led buyout

Costa Mesa, Calif. – December 03, 2008 – Scarborough, Ontario-based Halltech Inc., the Canadian subsidiary of Japan-based Saiden Chemical Industry Co., has completed a management-led buyout of the firm. Transaction terms were not disclosed.

McGladrey Capital Markets LLC led the negotiations and acted as exclusive financial advisor to Saiden. Davis LLP acted as the legal advisor to Saiden.

The sale of Halltech allowed Saiden to restructure its North American operations and place greater focus on its North Carolina subsidiary as a growth platform. In addition, this transaction enables Saiden to reinvest its financial and management resources in high-growth East Asian markets.

An M&A Boom in Debt Collectors

M&A is heating up as buyers see a promising future in pursuing consumers' unpaid bills

By Jessica Silver-Greenberg

Not all dealmaking is dead. While many private equity firms, corporate buyers, and vulture investors have been scared off by the credit crunch, a flurry of activity is still occurring in one industry: companies that collect and buy consumer debt.

So far this year, $1.8 billion worth of mergers and acquisitions have been done in that business, compared with $1.65 billion in all of 2007. Meanwhile, overall M&A has dropped 26%, to $892 billion, in the first three quarters, according to Thomson Reuters. "Money never sleeps, and neither does the need to collect it," says Charlene A. Davidson, a senior managing director at researcher McGladrey Capital Markets....

McGladrey Capital Markets leads negotiations as HealthEdge acquires Intra-Op Monitoring

Costa Mesa, Calif. – November 21, 2008 – Intra-Op Monitoring Services Inc., an intra-operative neurophysiological monitoring company, has been acquired by HealthEdge Investment Partners. Transaction terms were not disclosed.

McGladrey Capital Markets LLC initiated the transaction, sourced the buyer, led the negotiations and acted as exclusive financial advisor to Intra-Op Monitoring Services. Illinois-based Ungaretti & Harris acted as the legal advisor to Intra-Op Monitoring, and Shumaker, Loop & Kendrick, LLP in Tampa, Fla., served as lead deal counsel for HealthEdge Investment Partners.

McGladrey Capital Markets leads negotiations as Mitchell Imports acquires Aldik

Costa Mesa, Calif. – November 14, 2008 – The Mitchell Import Company, d/b/a TJ Collection, has acquired Aldik Inc., a leader in distinctive, high-quality merchandise servicing the floral and home decor industries for more than four decades. Transaction terms were not disclosed.

McGladrey Capital Markets LLC acted as the lead financial advisor to Aldik’s former owner, Encore Consumer Capital, a San Francisco-based private equity firm. Latham & Watkins LLP acted as the legal advisor to Encore, and Bryan Cave LLP provided legal counsel to Mitchell Imports.

"The sale of Aldik enabled our client, Encore Consumer Capital, to selectively maximize its portfolio holdings and reposition capital for future investment opportunities," said Charlene Davidson, Senior Managing Director of McGladrey Capital Markets. "Furthermore, Aldik will benefit from an experienced and strategic partner in Mitchell Imports, enabling additional growth and continued market leadership opportunities. This divestiture was an optimal transaction for all parties."

Trickle Down Economics (from Mergers & Acquisitions)(subscription required)

The middle market, though shielded, is not immune to the carnage facing Wall Street.

..."The mid-market has always been more pragmatic," adds Hector Cuellar, the president of McGladrey Capital Markets (FKA: RSM EquiCo Capital Markets). "We've just never been afforded the luxury to chase after anything too exotic."...

...Certainly mid-market shops will be opportunistic when bigger deals present themselves. Hector Cuellar, the president of McGladrey Capital Markets, notes his firm's industry expertise and geographic coverage could see McGladrey "step into a lot more of those $500 million to $1.5 billion deals."...

..."There's been a lot of consolidation in terms of who is holding the capital today," McGladrey Capital Markets senior managing director Charlene Davidson notes, alluding to the foreign investments in the financial services space.

"It's had a humbling impact," she adds. "In the past the US has been very domineering when it comes to what regulation looks like. Going forward, I think you're going to see the EU have a far greater voice... Basel II requirements will be coming at us one way or another."...

Drill, baby, drill (from TheDeal.com)(subscription required)

....Equipment companies are also on the prowl for add-ons. Smith Materials and Equipment Co., Halliburton Co. and Cameron International Corp. are all on the hunt for targets, according to Mike Parham, a banker at McGladrey Capital Markets.

It's not entirely a zero-sum game, however, as not all majors that have cut back on drilling are looking to buy. Many find themselves in the same predicament as the middle-market companies mentioned above. Chesapeake Energy Corp., for example has become a seller largely as a result of its declining stock price, says Parham....

Parham also anticipates private equity will return to oil and gas midmarket M&A. "I think [in] January or February you're going to see a lot of private equity funds jump back into the market," he predicted. "I think there are going to be a lot of going private transactions."

A new president in the White House heightens worry for some in the sector. "There's a concern you're going to see an increase in the capital gains tax [under an Obama presidency]," said Miroslav Lazarov, vice president at McGladrey Capital Markets. Lazarov adds that while an Obama administration would be more focused on developing renewable energy, any economic upswing would increase oil demand for the short term, which should keep markets robust.

"We're going to be forced to start drilling again," Lazarov said.

Mother Nature may also complicate matters. "All it's going to take is a little bit of a cold spell and oil prices are going to shoot back up," said Parham, who anticipates a return to oil prices around $80 a barrel. "Don't believe the demand decline hype."

Historical Perspectives (from the Orange County Business Journal)

HECTOR CUELLAR
PRESIDENT, MCGLADREY CAPITAL MARKETS

CHARLENE DAVIDSON
SENIOR MANAGING DIRECTOR, MCGLADREY CAPITAL MARKETS

This crisis is unmatched and while its visible implications are often compared to that of the Great Depression, this touches far more aspects of the economy and with deeper global implications at stake. It’s so complex that the consumer, commercial, corporate and global markets are all simultaneously affected. The interconnectivity of these capital markets is negatively affecting personal stock accounts, corporate balance sheets and the real estate we live on, work in and drive by. In other words, this touches everybody.

One move by the government won’t fix it. The root of the problem began with loss of control and oversight, eventually spreading to potentially intentional fraudulent practices. And despite the evidence of a fractured system years ago, the immediate opportunities outweighed the complexities of meaningful discovery and conscientious objection to the enormous wealth being created.

We’re nervous, yet prepared to weather the storm. We think it could be another six to nine months for the undercurrents to stabilize and expect upward trends 12 to 18 months out. Credit markets have shut down for many types of deals. In the investment banking world there’s considerable market confusion and a realignment of investor strategies. Fundamentally speaking, a lack of financing makes deals harder to close. And with less cash flow from companies, deals become less attractive and even less likely to be financeable.

Larger deals are generally hit the worst. There were signs of their distress in 2007 and by the beginning of 2008, things got progressively worse and have since been trickling into the middle-market deal flow. The larger appetites for risk and the sheer magnitude of their exposures have sidelined many of the major Wall Street firms. The next tier of investment banks doesn’t carry the same risk but do remain subjected to significant downsizing. And while we are all vulnerable to a shrinking economy with less access to credit, we believe that boutique firms actually have the greatest opportunity ahead.

Domino Effect: Banks, Lenders Look to Shore Up Investments to Avoid Being Knocked Over by Credit Crisis (from the Orange County Business Journal)

Mergers and acquisitions have slowed to nearly a halt due to a lack of available credit.

Weaker profits from companies also are making deals less attractive, according to Hector Cuellar, president of McGladrey Capital Markets LLC, a Costa Mesa based investment bank.

Cuellar says it could be another six to nine months before things might turn around. “We’re nervous, but we’ll weather the storm,” he said.

Banks Say `Kiss My Ring,' Choke Dealmaking: Chart of the Day (from Bloomberg)

The credit squeeze choked off the market for most debt-financed takeovers worth more than $5 billion last year. Now the smallest deals are getting killed too.

"There aren't people lending," said Paul Weisbrich, an investment banker at RSM McGladrey Inc. To even consider a loan, lenders are saying, "Kiss my ring."

The CHART OF THE DAY shows U.S. mergers since 2005 by dollar value and by number of transactions. They plummeted by value in 2007, when banks cut back the syndication of loans for multibillion-dollar deals. This year, the number of deals has plunged too, as banks reject financing for takeovers worth just $50 million, said Weisbrich, who is based in Costa Mesa, California.

RSM McGladrey advises on takeovers of less than $1 billion, those it calls "middle market" transactions. They aren't usually as dependent on market cycles as bigger deals, Weisbrich said, because they are often driven by the retirement plans of company founders, and depend on links to individual banks rather than the syndicated loan market. Now, even those bank relationships are coming under stress as banks hold onto cash.

"This thing is almost hermetically sealed," said Weisbrich, whose firm is a unit of H&R Block Inc. "The joke in M&A circles is that this is the time to go to Tuscany, because there's not a lot going on."

McGladrey Capital Markets leads negotiations as Böhler Uddeholm AG acquires Summerville Steel Company

Costa Mesa, Calif. – November 7, 2008 – Böhler Uddeholm AG has acquired Kent, Wash.-based Summerville Steel Company, a privately-held distributor of specialty steel products. Transaction terms were not disclosed.

McGladrey Capital Markets LLC (www.mcgladreycm.com) initiated the transaction, led the negotiations and acted as the exclusive financial advisor to Summerville Steel.

McGladrey Capital Markets leads negotiations as Alexandria Extrusion Company acquires M&M Metals

Alexandria Extrusion Company has acquired M&M Metals. Terms of the transaction were not disclosed.

McGladrey Capital Markets LLC initiated the transaction, led the negotiations and acted as exclusive financial advisor to M&M Metals.

"Alexandria Extrusion Company's acquisition of M&M Metals not only will significantly expand AEC's geographic presences into the Southwestern U.S., but it will also allow the combined company to provide customers with the highest level of complementary heat-sink engineering and machining expertise," said John Dorey, senior managing director, McGladrey Capital Markets.

A team of McGladrey Capital Markets professionals contributed to the successful close of this transaction. Dorey, Michael Sims, vice president, and Richard Rhyu, associate vice president, led the deal team.

McGladrey Capital Markets Promotes Two Senior-Level Professionals

McGladrey Capital Markets LLC, a global middle-market investment bank, has promoted two senior-level professionals to the position of director. Bradley Schreiber and Sean Walker were both previously senior vice presidents in the firm’s Costa Mesa, Calif. headquarters.

Schreiber oversees the firm’s Recreation & Leisure Investment Banking Group. Walker leads the Healthcare Investment Banking Group.

“While we pride ourselves on our ability to attract top-notch professionals from outside the firm, it is perhaps even more important to develop our in-house talent,” said Hector J. Cuellar, the firm’s president. “Both Sean and Brad have played central roles in our growth, and we have no doubt they will continue to contribute to our success and that of our clients.”

U.S. Market Report Overview (from Flashwire Weekly)

Despite regional bank valuations being at all-time lows, the National City deal shows that buyers want even lower prices due to continued worries over the potential landmines on balance sheets. And the U.S. Treasury’s bailout plan may also be playing in a role in further belowmarket deals.

“Most of the take-under deals are being arranged with the regulating agencies,” said Charlene Davidson, Senior Managing Director at McGladrey Capital Markets. “Until regulators are more comfortable that the situation has been stabilized, they will push more banks to take these deals.”

Locked Out of Homeownership (from the San Diego Business Journal)

The mortgages were ascertained for risk and comingled with larger bundles of mortgages, then sold to investors all over the world. These mortgage-backed securities found plenty of investors, and for good reasons.

“They were relatively secure because they were backed by people’s homes, and in a good economy, they continued to appreciate in value,” said Charlene Davidson, an investment banker with Costa Mesa-based McGladrey Capital Markets. “There was a huge demand.”

Another factor that helped pump up the housing market was the banks’ expansion of their client base to include more low-income borrowers. Thanks to changes in regulations approved by Congress in 1999, banks pushed loans to borrowers who formerly wouldn’t have been able to qualify.

“Not only did they relax the standards, you could say they eliminated them,” Davidson said. “Honestly, anybody could get a loan.”

Damn the CFIUS, full speed ahead (from The Deal Newsweekly)

After Dubai, United Arab Emirates-based DP World's attempt to acquire U.S. port facilities was thwarted in 2006, a much more stringent Cfius law passed Congress. Now merged companies that violate conditions imposed by Cfius can see their deals broken up after they've been consummated. And foreign state-controlled purchasers can expect to have longer Cfius reviews. The Treasury Department may draft new rules by November.

None of this is dissuading buyers. "People have been willing to endure [Cfius] because the U.S. defense industry market is so large, everybody wants a piece of it," says Trevor T. Bohn, vice president at McGladrey Capital Markets LLC in Costa Mesa, Calif.

Southridge explores alternatives (from The Deal) (subscription required)

Sources said ethanol prices have been on the wane recently. "There's a glut of capacity, the prices have come down significantly. A lot of the spending into ethanol has been drying up," said Michael Parham, managing director at McGladrey Capital Markets LLC in Costa Mesa, Calif.

Parham said that while a renewable energy-focused policy is a sure bet in the U.S., demand has slowed for nowe_SEmDeven with production tax credit legislation for ethanol companies now before Congress.

U.S. Market Report Overview (from Flashwire Weekly)

As potential buyers hit their credit limit, sellers have to put in some of their own financing to help close a deal, says Charlene Davidson, Senior Managing Director at McGladrey Capital Markets LLC.

“We are seeing seller financing being used more often, either because the buyer requests it or the seller offers it,” Davidson said. Davidson said that many lenders are still able to provide financing, yet they are becoming much more stringent to whom they lend. Financing commitments have tighter covenants and lenders are scrutinizing inventories and other physical property more closely in asset-based loans.

Buyers, too, are putting in more protection on deals, with earn-outs becoming more common as a way to keep sellers on their toes after a deal. And material adverse change clauses are being written more specifically so buyers will have better ammunition to get out of a deal. For their part, sellers are calling for more break-up fees, especially in light of the many buyouts that have already gone awry.

Davidson says that deals, while they are still happening, are taking longer due to the increased diligence and more careful scrutiny from all sides.

“The volatility in the market is not normal,” Davidson said. “It can make somebody miserable one day, then happy the next. You want to be sure you have a tightly written deal so people can be satisfied with the outcome.”

Q and A with Hector J. Cuellar, President of McGladrey Capital Markets (from the Orange County Business Journal)

Hector J. Cuellar is president of McGladrey Capital Markets, a global investment bank specializing in mergers, acquisitions, divestitures, recapitalizations, restructurings, capital raising and fairness opinions. Under his leadership, the firm has completed more than 150 M&A transactions, tripled its average deal size, almost doubled its number of cross-border transactions, generated billions of dollars in liquidity for its clients and been annually ranked among of the nation's top 20 M&A advisors. Mr. Cuellar, who came to the firm from Banc of America Securities, has more than 25 years of experience in corporate and investment banking.

McGladrey Capital Markets Hosts Global M&A Symposium in London

More than 80 senior-level executives from major European corporations, private equity firms and law firms gathered in London yesterday to discuss the impact of the global credit crisis on mergers and acquisitions and capital markets overall.  The occasion was an international mergers and acquisitions symposium hosted by middle-market investment bank McGladrey Capital Markets LLC (www.mcgladreycm.com).  

Entitled “Global Mergers and Acquisitions: Converting Today’s Volatility into Tomorrow’s Opportunity,” the symposium featured a keynote presentation from Martin Taylor, chairman, Syngenta S.A..

Loan Squeeze Gets Tighter (from the San Diego Business Journal)

That retreat has slowed lending and investment of second-tier players such as private equity funds, hedge funds and asset-based finance companies, all of which depend on larger institutions for their funding, says Charlene Davidson, an investment banker with McGladrey Capital in Costa Mesa.

"Over the last six months, I’ve been seeing lots of private equity funds walk away from deals because the banks have pulled their financing," Davidson said. Things have gotten so bad that banks are reluctant to lend to each other, she says.

‘Crisis of Confidence’: Markets Short on Clarity (from the San Diego Business Journal)

At the center of the problem is the volume of bad loans that are contained in the billions of dollars of mortgage-backed securities, and how many of those mortgages will eventually sour, said analysts.

"The uncertainty here is really deep," said Charlene Davidson, an investment banker with McGladrey Capital Markets in Costa Mesa. "There’s a significant amount of private and public balance sheets that are holding some form of these derivative securities."

RSM EquiCo Changes Name (from The Deal) (subscription required)

M&A advisory firm RSM EquiCo Capital Markets LLC has changed its name to McGladrey Capital Markets LLC. The firm’s new name is a result of its closer integration with RSM McGladrey Inc., which provides accounting, tax and other business consulting services. Both firms are indirect subsidiaries of H&R Block Inc. Since Hector J. Cuellar took over as RSM president in 2004, the firm says it has tripled its average deal size and almost doubled the number of cross-border transactions.

RSM EquiCo Capital Markets is Renamed McGladrey Capital Markets

Global investment bank RSM EquiCo Capital Markets LLC, one of the nation’s most successful merger and acquisition advisory firms, has changed its name to McGladrey Capital Markets LLC (www.mcgladreycm.com).

The firm’s new identity reflects its closer integration with RSM McGladrey, Inc., one of the nation’s largest providers of accounting, tax and business consulting services. Both firms are indirect subsidiaries of H&R Block, Inc. (NYSE: HRB).

The best kind of takeover: a welcome one (from The Globe and Mail)

Putting itself up for sale has led to nothing but good for Peterborough manufacturer Quickmill

Companies Boost Employee Participation in 401(k) Plans (from the San Diego Business Journal)

The simple explanation, according to one source, is that many people often refuse to save for their retirement.

“Let’s face it, people are either savers or they’re not. The ones that are not need to be educated and it’s not easy,” said Charlene Davidson, senior managing director for RSM EquiCo Capital Markets LLC, an investment banking services firm in Costa Mesa.

Blame greed, Insider Q&A is told (from the Orange County Register)

What’s going on here? We found some Orange County investment bankers – specialists in more modest “middle market” dealmaking – who could spare a few minutes on Friday to help us understanding the magnitude of the financial crisis. Well, at least as of Friday afternoon! Hector Cuellar is president of RSM EquiCo Capital Markets from Costa Mesa; and Charlene Davidson is the senior managing director. So, let’s go to school …

Big bang or mini-fireworks? (from ICIS Chemical Business)

The aging of the US population and business owners, as well as the coming presidential elections, is also spurring M&A activity.

"One driver of M&A is generational. For example, there is one chemical company with sales below $50m and a CEO who is 64 and looking to find a solution," says Jean Cayanni, senior managing director and head of the chemicals practice and capital raising at US-based investment bank RSM EquiCo. "There is also uncertainty with regard to the US tax code. Some sellers want to close before the end of the year to make sure they are under the current capital gains structure."

QinetiQ deal may be first of many (from The Deal) (subscription required)

Hector Cuellar, president of RSM EquiCo Capital Markets LLC, an investment bank focusing on middle markets, said he expects international strategic companies in the sector to continue seeking U.S. acquisitions. Langman agreed, adding that most of these deals will be for private companies in the $250 million and below range. Dominion Technology is a private company based in Reston, Va.

FOCUS: Dealmaking PE firms, hedge funds turn to DIY financing (from Financial Week)

“The subordinated debt and mezzanine capital players in our market have stepped up in a big way,” said Jay Sherwood, senior managing director at RSM EquiCo Capital Markets, which focuses on smaller deals. “Yes, it's more expensive in terms of the cost of capital, but in terms of getting a deal done, sometimes it's the critical linchpin.”

Energy Buyouts: Not Made in the USA (from The Wall Street Journal)

Then there is the uncertain fate of a proposed lifting of the U.S. government’s ban. “There is just so much growth in offshore drilling outside the U.S.,” said Michael G. Parham, managing director of energy deals at investment bank RSM EquiCo Capital Markets. “It’s a resource play to get access to resources” in the North Sea, West Africa, and Russia for the investors.

Any Port in a Storm (from Mergers and Acquisitions Journal)

Recession-resistant sectors, such as healthcare, energy and defense, will still attract buyers, although no industry is completely safe today.

RSM EquiCo Capital Markets leads negotiations as Actividades de Construcción y Servicios acquires controlling position in Applied Control Technology

Actividades de Construcción y Servicios (BMAD: ACS), through its CYMI subsidiary, has acquired a controlling position in Applied Control Technology Inc. and its subsidiaries Delta P and Industrial Process Services. Transaction terms were not disclosed.
RSM EquiCo Capital Markets LLC initiated the transaction, led the negotiations and acted as the lead financial advisor to Applied Control.

RSM EquiCo Capital Markets Ranked No. 13 on Factset Mergerstat’s List of Top U.S. M&A Advisors for First Half of 2008

Global investment bank RSM EquiCo Capital Markets LLC is continuing its move up the rankings of the nation’s most active merger and acquisition advisory firms, according to Factset Mergerstat LLC. Factset Mergerstat, an authoritative provider of international M&A data and information, listed RSM EquiCo No. 13 on the basis of completed deals during the first half of 2008. The investment bank was ranked No. 2 for deals below $100 million in transaction value.

RSM EquiCo Capital Markets leads negotiations as Ted Nelson acquires Hilo Hattie

A private investor group led by Ted Nelson has acquired Hilo Hattie Inc. Transaction terms were not disclosed. RSM EquiCo Capital Markets LLC initiated the transaction, led the negotiations and acted as the lead financial advisor to Hilo Hattie.

Investment Bank Calls for Congressional Action on Airline Re-Regulation

A prominent investment bank with strong ties to the aerospace and airline industry is calling on Congress to increase regulation of the U.S. airline industry, arguing that a financially healthy industry is crucial to the well being of the nation’s economy.
“A strong domestic airline industry is an essential component of our nation’s overall economic health, and the sector’s current woes risk further damage to an already weak economy,” said Hector J. Cuellar, president, RSM EquiCo Capital Markets, the global investment banking arm of RSM McGladrey and H&R Block (NYSE: HRB). “Government action is long overdue. Congress must act promptly to prevent further industry deterioration and the corresponding deleterious effects on the nation.”
Click here for a more in-depth exposition of Cuellar’s position on airline regulation.

RSM EquiCo Capital Markets leads negotiations as Chemring Group acquires Scot

Scot Inc., a manufacturer of cartridge-actuated and propellant-actuated devices for use in the commercial aerospace and defense markets, announced that it has signed a definitive agreement to be acquired by Chemring Group PLC. The announced purchase price was $40 million.
RSM EquiCo Capital Markets LLC initiated the transaction, led the negotiations and acted as the exclusive financial advisor to Scot and its stakeholders. Reed Smith LLP acted as the legal advisor to Scot. Seyfarth Shaw LLP acted as the legal advisor to Chemring.

RSM EquiCo Capital Markets leads negotiations as ODIM acquires Numet Engineering

ODIM Inc., a subsidiary of Norway-based ODIM ASA (ODIM: OBX), has acquired Numet Engineering Ltd., for 110 million Norwegian Kroner ($22 million Canadian). RSM EquiCo Canada Inc. led the negotiations and acted as the exclusive advisor to Numet Engineering.

RSM EquiCo Capital Markets promotes three to managing director

RSM EquiCo Capital Markets LLC, a global investment bank, has announced the promotion of three senior-level professionals to the position of managing director. Mark Agosto, David Burke and Michael Parham were previously senior vice presidents.
Agosto, Burke, and Parham each lead one of the firm’s industry specialty groups. Agosto runs RSM EquiCo’s Rubber, Plastics & Advanced Materials group; Burke oversees Engineering, Construction and Building Materials; and Parham heads the Energy team.

Investment Bank: Aerospace & Defense Industry Dealmaking will Remain Active in 2008

While the domestic airline industry faces severe challenges due to skyrocketing jet-fuel prices, the overall commercial aviation sector should continue to thrive in 2008 and beyond. Development of major new aircraft from Boeing and Airbus is keeping suppliers busy, while demand remains strong for regional jets, business jets and very light jets. Dealmaking activity is robust, with strategic buyers pursuing acquisitions to control costs and secure new value-add product lines and cash-rich private equity groups aggressively competing for middle-market acquisition candidates.
These were among the observations shared by RSM EquiCo Capital Markets LLC at the global investment bank’s third annual Aerospace & Defense Conference, held last week in Southern California. The industry forecast was presented by Paul Weisbrich, senior managing director and head of the firm’s Aerospace & Defense Investment Banking Group.

LBO Deal Of The Month: Deal By Deal, Heritage Works To Redeem Itself To Investors (from Dow Jones Private Equity Analyst)

Saunders & Associates makes machines that test the accuracy of frequency control devices found in most electronics, and is a leader in its relatively small industry. The Phoenix-based company was founded in 1967 and decided to seek a buyer last year, as members of the founding team, including Jack Saunders, were ready to liquidate their stakes, said Heritage General Partner Peter Hermann. It went on the auction block in August, just as the credit crunch hit. “We launched this into an unknown, unquantifiable credit market,” said Paul Weisbrich, a senior managing director at RSM EquiCo Capital Markets LLC, which advised the sellers.
RSM EquiCo put in a good word for the firm, helping it get past any hesitancy on Saunders & Associates’ part about teaming up with a fundless firm. “They have a reputation of certainty to close,” said Weisbrich. “And they aren’t known for retrading at the 11th hour just to get a better price.”

RSM EquiCo Capital Markets leads negotiations as Imperial Headwear acquires Merge Left

Imperial Headwear Inc., a portfolio company of investment firm MCG Global LLC, has acquired Merge Left Inc. RSM EquiCo Capital Markets LLC initiated the transaction, led the negotiations and acted as the exclusive advisor to Merge Left.

Scott Witter Named Vice President of RSM EquiCo Capital Markets

RSM EquiCo Capital Markets LLC, a global investment bank, has named Scott Witter vice president. Witter, who is based in the firm's Costa Mesa corporate headquarters, will provide merger and acquisition and capital raising advisory services to the firm's investment banking clients. His primary responsibilities will include helping expand RSM EquiCo’s presence in the packaging industry segment of the basic industries sector.

RSM EquiCo Capital Markets leads negotiations as 1-800-FLOWERS.COM acquires DesignPac

1-800-FLOWERS.COM Inc. (NASDAQ: FLWS) has acquired DesignPac Inc. for $38.25 million. RSM EquiCo Capital Markets LLC led the negotiations and acted as the exclusive financial advisor to DesignPac.
“DesignPac is an important addition to our gourmet food and gift basket business. It brings tremendous capabilities and experience in the design, sourcing, production and distribution of gift baskets and gift sets, as well as strong relationships with many of the leading retailers throughout the country,” said Jim McCann, chief executive of 1-800-FLOWERS.COM. “It also brings an experienced and focused management team that has built a cost-efficient and profitable business that, we believe, can help us enhance the growth and profitability of all our existing gourmet food gift businesses.”

Barter Up: The consensus among market pros is that the climate is right for a surge in stock-for-stock deals

Dealmakers waiting for conditions to perk up have largely been disappointed in the first quarter of the year. According to research from R.W. Baird, middle-market deals sank by 25% during the first three months of 2008, with the drop largely attributed to the tightened lending markets. But while the uncertainty has impacted highly leveraged transactions, some believe the conditions could accommodate a resurgence in stock-for-stock deals.
What may make a difference is that many companies today remain cash rich, with healthy balance sheets. And cash deals will always be preferable to the somewhat fluid valuations of stock transactions, says Jean Cayanni, senior managing director at RSM EquiCo Capital Markets. Reflecting the buyer reticence, he notes: "Very often a large company doesn't want to issue stock because it dilutes its own shares."
Typically stock deals are considered educated bets on the future, and ideally, a stock-for-stock merger strives to make the most of undervalued stock. "Let's say you are Company A and your stock is undervalued and you sell it for cash. On the other hand if you get stock in Company B, it's likely that company B is also undervalued. Therefore when the market comes around, you are going to get a pop," Cayanni describes.
Cash-strung companies during the last downturn were forced to turn to the stock-for-stock structure in order to get deals done. While declining earnings numbers in the current market would seem to hint at that trend's second coming, Cayanni believes such a movement has yet to take place.
"In 2003, 2002, several companies were selling leveraged balance sheets - you cannot pay cash, therefore you issue stock," Cayanni says. "Those are things that can occur again, although I'm not sure it's there right now."
The Baird numbers seem to back Cayanni up. For the year through February, all-stock transactions made up 9.1% of all middle-market deals compared to 12.4% in the year ago period. But at the same time, the market hasn't yet entered a recession, at least officially, although most prognosticators concede a contraction has likely already begun. If that's the case, stock prices will indeed begin to reflect that.

In Defense of M&A: Deals in aerospace and defense are likely to heat up, and PE firms can expect competition from European acquirers (from Investment

The manufacturing and assembly of the airline industry's next wave of large passenger airplanes like the double deck Airbus A380 and Boeing 767 is really just beginning to ramp up, says Paul Weisbrich, a senior managing director at RSM EquiCo Capital Markets. "The entire aerospace and defense manufacturing base, whether it's metals or composites, has everyone thinking about whether to invest or merge. There is a level of euphoria in the aerospace industry that people haven't felt for a long time."
Renewed M&A interest in the market couldn't come at a better time for Costa Mesa, Calif.-based investment bank RSM EquiCo, which is holding its third annual aerospace and defense symposium on June 4 in Marina Del Rey, Calif. The event will feature a keynote address from retired Major General Charles Vyvyan, panels featuring Joseph Berenato, chief executive of Ducommun, composite materials maker HITCO, as well as a private equity session featuring Mark Jrolf, a partner at Heritage Partners, and Hammond Kennedy Whitney partner Ted Kramer.
Weisbrich, who's been meeting with executives from Boeing and other aerospace companies, says that the aerospace supply chain boom will really take place in mid-2009. "Right now people have contracts, but they're not really manufacturing the planes," he says.

RSM EquiCo Capital Markets leads negotiations as RFE Investment Partners acquires NUDO Products

RFE Investment Partners has acquired NUDO Products Inc. Terms of the transaction were not disclosed. RSM EquiCo Capital Markets LLC initiated the transaction, led the negotiations and acted as exclusive financial advisor to NUDO Products.
“Despite unsettled economic conditions, the NUDO management team continued to deliver strong operating and financial performance during the sale process,” said Bruce Manchester, senior managing director, RSM EquiCo. “RFE Investment Partners, which was selected from an attractive group of interested buyers, has exciting plans for continued NUDO success.”