CLEVELAND and CHICAGO, March 10, 2016 /PRNewswire/ -- Metals companies are navigating a "new normal" as challenging market conditions stifle growth, according to the Metals Insider, an industry research report released by Brown Gibbons Lang & Company (BGL) and available for download HERE or www.bglco.com. Muted organic expansion opportunities will drive selective strategic acquisitions, particularly as companies are under pressure to meet shareholder expectations for growth.
The BGL report, now available online, documents that headwinds of overcapacity, slower global growth, and soft demand have put pressure on margins. While the credit markets continue to remain open, commodity volatility has reduced lender appetite and put a strain on liquidity.
Despite these obstacles, the metals M&A market remains active, according to Vince Pappalardo, head of BGL's Metals investment banking practice. "Large public companies are actively looking for new platforms and complementary acquisitions to better position themselves for stronger markets in the future," says Pappalardo, a sentiment driven by a stable near-term outlook for the economy and the need for acquisition-driven growth. "Middle market companies faced with little expected value appreciation and increased risk are evaluating alternatives. The difficult operating environment is motivating more private company owners to consider an exit."
The metals market has seen marquee assets trade over the last 12 months, including the sale of Precision Castparts to Berkshire Hathaway and RTI International Metals to Alcoa. Aerospace is among the sought after markets where M&A activity is high. Notable sales include Noranco and Composite Horizons to Precision Castparts and LaCroix Industries to Accurus Aerospace, a growth platform of Liberty Hall Capital Partners. Consolidation in the fragmented service center and scrap markets is anticipated. Reliance Steel & Aluminum, Klöckner & Co, and Ryerson Holding Corporation each reported acquisitions.
Reduced liquidity will lead to more distressed and bank-driven M&A activity, a higher volume than in the previous cycle and with a greater number of interested buyers, particularly given that banks will now see a viable M&A solution to challenged credits.
About Brown Gibbons Lang & Company
Brown Gibbons Lang is a leading independent investment bank serving the middle market. BGL specializes in mergers and acquisitions advisory services, debt and equity placements, financial restructuring advice, and valuations and fairness opinions, with global industry teams in Business Services, Consumer, Environmental & Energy Services, Healthcare & Life Sciences, Industrials, and Real Estate. BGL has offices in Chicago and Cleveland and real estate offices in Chicago, Cleveland, Irvine, and San Antonio, in addition to Global M&A partner offices in more than 50 countries across 5 continents. BGL is able to deliver to our clients unparalleled access to strategic relationships, investors, and opportunities globally. For more information, please visit www.bglco.com.
SOURCE Brown Gibbons Lang & Company