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.