The Japanese tsunami and resulting tragic accident at the Fukushima Daiichi nuclear power plant forced a pause in the growing positive sentiment behind this source of power. While opinions appear to have turned against growth in this sector there is still substantial infrastructure that needs to be maintained. These factors might have led a number of investors and acquirers to move away from this segment and focus on other parts of the power industry. The transaction data disputes this and shows that interest in companies that serve the nuclear industry remains strong.

The healthcare industry is faced with slow revenue growth, uncertainties resulting from healthcare reform and the economy in general.  As a result, hospitals and healthcare providers are looking to cut expenses and increase efficiencies or to consolidate in the hopes of streamlining operations and gaining pull with the industry payors.  As strategic mergers and acquisitions in the sector continue, private equity firms are positioning to capitalize on this industry in transition.  BDO, the national accounting and consulting firm, recently released a study, which showed 21 percent of private equity professionals (the second largest percentage of all respondents) see the greatest opportunities for new investments, during the next 12 months, in the healthcare and biotech industries.

The abundance of natural gas in the U.S. has resulted in a number of interesting circumstances. First, the supply of natural gas has increased to the point where storage facilities are close to capacity. Second, due to high levels of supply prices have dropped dramatically, which has resulted in a greater proportion of the U.S.’s power generation being derived from this fuel. Third, prices are expected to remain low due to the high levels of supply that have yet to be tapped. Fourth, the infrastructure to transport the natural gas from the point of extraction to the end user is still being built. Fifth, natural gas is accepted as a cleaner fuel for power generation. This confluence of factors has created depressed prices for natural gas, but the segments that use and support the extraction and use of natural gas are experiencing exceptional growth not only in revenues and profits, but also merger and acquisition activity.

Today is one of the most interesting times in recent history to be the owner of a privately-held business as these owners find themselves experiencing a rebound in the domestic economy but facing an uncertain tax environment. The question that many business owners are asking themselves is do we monetize some or all of our company today and capture the increased value of the business and lower tax rates or do we stay invested and realize further value appreciation but risk a higher tax environment. While the path becomes clear for many business owners, many remain in a quandary. The answer for these individuals may lie somewhere in the middle where they can monetize some of their investment in the current low tax rate environment, keep significant ownership for future appreciation and reduce their corporate and individual tax profiles. These are all achievable goals by executing a sale of a portion of their company to an Employee Stock Ownership Plan (ESOP).

There have been some recent changes to the ever-complicated rules governing goodwill, fair value, impairment testing. Previously, an entity which recorded goodwill as part of a transaction was required to test the goodwill for impairment at least annually. The test consists of two parts, the first of which is comparing the current fair value of the reporting unit, in which the goodwill is recorded, to the carrying value of the reporting unit. This step requires the valuation of the reporting unit.

The volume of M&A transactions remained relatively flat in first quarter of 2012 when compared to recent periods.  However, an interesting observation is that M&A market activity now (15,488 transactions) exceeds the transaction volume of FY 2007 (12,363) by approximately 25%. Remember, that FY 2007 was the peak of activity for M&A transactions.

Implementing an Employee Stock Ownership Plan (ESOP) as part of a diversification or exit strategy for business owners fell out of favor in recent years as the credit crisis reduced liquidity options. All evidence, including recent transaction activity, indicates liquidity has returned to the ESOP market. This development, coupled with several research studies completed by various academic and non-profit research institutes, makes the sale to an ESOP a compelling strategy for today’s business owners who want to participate in the future growth of their business while diversifying personal assets.

As we await the U.S. Supreme Court review of President Obama’s healthcare overhaul and find ourselves deep in the century-long American debate over healthcare, three issues seem clear for this industry in transition. First, regardless of the Supreme Court rulings, coverage as we have historically known it will expand and more Americans will be able to access that coverage. The issue is how much will this market grow. Second, cost and the containment of those costs must be streamlined across the healthcare value chain. And finally, businesses involved in all areas of the healthcare industry will continue to consolidate in an effort to lower cost and increase coverage or market share. Whatever one’s political views or vision of the future, these issues are the core strategic drivers of change and are at the center of driving mergers and acquisition in the U.S. healthcare industry. Obviously, the Supreme Court decision matters. Whatever the decision, these issues will continue to drive the transformation that has been set in place and will continue to fuel M&A.

The industrial services sector is undergoing a resurgence as merger and acquisition activity continues to grow. As with most sectors, transaction activity decreased substantially after the economic downturn in 2008. The industrial services sector was hit particularly hard due to cutbacks in spending by the private and public sectors.

It’s Valentine’s Day, love is in the air and ESOP owned companies have suitors lining up at their doors in the form of banks and other capital providers attempting to woo them.  The fact that ESOP owned companies outperformed their competitors during the most recent recession is only one of the reasons that ESOP owned companies are finding an array of capital providers eager to finance their growth plans, acquisitions or ESOP stock purchases.  ESOP owned companies are better borrowers due to their tax benefits as well as the continuity of the employee base and management team.  As this becomes more widely known, it is a great time for ESOP owned companies to explore their options for financing and to be sure that they are aligning themselves with the best partners as they continue to grow and transition ownership.