LCG Managing Director, Christopher Pizzo, Interviewed by Margie Manning with the Tampa Bay Business Journal on The State of the M&A Market
A ‘December to remember’ in M&A
Originally Written by Margie Manning, Quality and Content Editor, Tampa Bay Business Journal
Although merger and acquisition activity overall was down in 2012, a flurry of deals in the closing days of the year kept attorneys and investment bankers hopping.
“It was a December to remember in the world of M&A,” said John Connery Jr., shareholder at Hill Ward Henderson. The Tampa law firm worked on the acquisition of CLW Real Estate Services Group by Cassidy Turley.
Many of the deals were driven by changing tax laws.
“We saw a lot of companies — particularly private, family owned companies — get a deal done before the end of the year to benefit from a lower capital gains tax rate,” said John Hill Jr., senior managing director at Hyde Park Capital, an investment banking firm in Tampa that advised Vology in its merger with Bayshore Technologies Inc.
While the last-minute fiscal cliff compromise kept capital gains taxes from going up as much as expected, the tax will still jump from 15 percent in 2012 to 20 percent in 2013, with a 3.8 percent tax to pay for health care reform on top of that, Hill said. “That’s almost a 60 percent increase. When you’re dealing in millions of dollars, that’s a big increase in taxes,” Hill said.
The capital gains increase exacerbated the usual deals that normally occur at the end of the year, agreed Chris Pizzo, managing director of LCG’s investment banking and M&A group. The company has being doing a lot of work in the IT sector, particularly with companies involved in social media, mobility and cloud services — an area that Pizzo sees as fertile ground for deals ahead.
There were 3,612 deals in the United States in 2012, worth $768.9 billion, down 4.7 percent from 2011, a new report from mergermarket.com said. However, M&A in the fourth quarter was up by 19.3 percent from the third quarter.
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