Equipment finance M&A to take off

The Alta Group consultancy reports that interest in mergers and acquisitions (M&As) in the equipment finance industry has been high in the first half of 2018, reflecting a global trend, and predicts a flurry of activity in the US market by year end.

According to Thomson Reuters, the value of M&A deals announced this year has set an all-time first half record, both in the US and worldwide. If M&A activity continues at this pace, the worldwide total for 2018 will be the largest on record.

Alta’s M&A advisory practice leader James Jackson Jr. said, “Although the number of transactions completed in the first half of 2018 was not especially high in our industry, a relatively large number of independent equipment leasing and finance companies are currently involved in a sale process and we expect a number of sales will be announced in the next few months.”

Bruce Kropschot, senior managing director of Alta (pictured above), attributes the strong level of interest to the relatively high multiples reflected in the stock market and the M&A market, interest rates that are still quite low, substantial liquidity in corporations and financial institutions, and the recent tax legislation with its lower corporate income tax rates and 100% expensing on equipment purchases.

Kropschot noted, “Several of our clients had not considered selling their businesses yet, but M&A market conditions are so favorable now they concluded they could not risk missing out on the opportunity to sell while prices were high and there were many interested acquirers.”

Alta recently initiated the sale of Intech Funding Corporation to Verdant Commercial Capital, a California-based company that is focused on financing and leasing for manufacturing companies worldwide.

Verdant’s announcement stated, “This acquisition will give Intech opportunity for more growth along with a stronger capital base to expand. Intech is one of the leaders in machine tool financing with over $1 billion in lending for manufacturing companies since 1995.”