Pittsburgh acquirers activity down in 4Q

Written on January 13, 2012 – 6:34 am | by Chloe Gatenby

Wabtec President and CEO Al Neupaver views acquisitions as part of Wabtec’s balanced growth strategies and plans to keep on buying.

Pittsburgh-area companies curbed acquisition activity in the final three months of 2011.

A report by Pittsburgh-based investment banking boutique Raptor Partners LLC Raptor Partners LLC Latest from The Business Journals Stock market uncertainty stems M&A activity for much of 2011Once again, businesses wary of potential capital gains tax hikeMain Street Capital Holdings partners with firm on deal to acquire Contessa Follow this company counted 13 transactions, the second-lowest quarterly number in four years. Only the first quarter of 2009 had fewer, with 11. There were 19 during the fourth quarter of 2010.

That mirrored the national picture: there were 3,052 fourth quarter deals, the lowest level in a year.

Raptor used Capital IQ data augmented by its own research. Managing Director Brant Cappelloni said the fall-off was likely to do companies’ reluctance to take on risk because of the tumultuous stock market in late summer and the continuing debt crises erupting in several European countries.

“Our sense is that the volatility is going to continue in the early part of 2012, which may lead to some challenges in the M&A market, certainly for companies that have quite a bit of exposure in Europe,” Cappelloni said. “We’re hearing anecdotally that orders in the fourth quarter coming out of Europe were slowing or delayed. Those will be more difficult to value in the coming months. Assuming that the European Central Bank can stabilize their credit situation, we’d hope to get over that hump by the mid-to-latter portion of 2012.”

Still, 2011 was “a strong year for M&A” nationally, Cappelloni said. For the full 2011 year, there were 13,297 mergers and acquisitions, …

Pittsburgh-area companies curbed acquisition activity in the final three months of 2011.

That mirrored the national picture: there were 3,052 fourth quarter deals, the lowest level in a year.

Still, 2011 was “a strong year for M&A” nationally, Cappelloni said. For the full 2011 year, there were 13,297 mergers and acquisitions, up 8 percent from 2010’s 12,340.

Pittsburgh-based companies accounted for 67 in 2011, down from 86 the previous year.

Pittsburgh companies that were buyers during the fourth quarter — Wesco Wesco Latest from The Business Journals WESCO completes RS Electronics acquisitionWESCO to acquire RS ElectronicsDow down nearly 400 points Follow this company , Wabtec Wabtec Latest from The Business Journals Wabtec acquires Fulmer Co. Dow down nearly 400 pointsWabtec closes new credit facility Follow this company and Michael Baker Corp. Michael Baker Corp. Latest from The Business Journals Wisconsin DOT hires engineer for Hoan Bridge reconstruction in MilwaukeePeople & Awards: Executive LevelPeople & Awards: Executive Level Follow this company — have been avid acquirers over the past few years.

Wabtec , completed its purchase of Fulmer Co. in November 2011, an in-market transaction. President and CEO Al Neupaver views acquisitions as part of Wabtec’s balanced growth strategies and plans to keep on buying.

“In the past five years, we have acquired more than $500 million in businesses that have helped to expand our company internationally, to fill in product line gaps and to differentiate us further from the competition,” Neupaver said in a prepared statement. “We have had an active acquisition program, and we will continue to seek quality companies that fit our criteria.”

M&A activity, in Pittsburgh and across the country, will likely see a boost as business owners look to take advantage of favorable tax rates due to expire at year-end when the capital gains rate is restored to prior levels. This was supposed to occur at the end of 2010, but Congress opted to extend the tax break another two years.

“That will be on sellers’ minds,” Cappelloni said.

In fact, Lieberman believes activity prompted by capital gains concerns will be more intense than two years ago.

“Businesses are performing far, far better than they were in 2010,” he said. “A lot of businesses had very good years in 2011, in spite of what went on in the markets.”

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