Deal Activity
Growthink Capital Research tracked 880 closed Merger & Acquisition transactions with U.S. targets in June 2024, consistent with the 885 tracked in May 2024.
This total includes 379 Private Equity or Private Equity-backed acquisitions and 501 corporate acquisitions. The distribution of deals continues to be skewed towards non-PE corporate acquirers, which represented 57% of the total in June 2024.
Top Industries and Segments
The top 5 associated industries by number of completed transactions were Commercial Services, Enterprise Software, Media & Information Services, Consumer Services, IT Consulting & Outsourcing.
The top 5 associated verticals were Manufacturing SaaS, Industrials, TMT, Cybersecurity. Fragmentation remains high, with the top 5 verticals representing merely 27% of total transactions.
Revenue and Earnings Multiples
From the transactions that disclose the valuation as well as revenue and/or EBITDA information, Growthink Capital derived a median revenue multiple of 2.5x and a median EBITDA multiple of 9.3x (excluding negative EBITDA companies).
The median deal size was $100 million, a slight drop from the $116 million median in May.
The Biggest Deal
The largest transaction in June was Home Depot’s $18.25 billion acquisition of SRS Distribution.
Based in McKinney, Texas, SRS is a major distributor of residential roofing materials, landscaping, and pool supplies in the U.S. The company provides building products, roofing systems, siding, windows, and other materials to building contractors, home builders, and retailers.
The Home Depot (NYS: HD), the world’s largest hardware store chain, issued a significant amount of debt to finance the acquisition. This transaction, the largest in Home Depot’s history, is expected to boost its growth with residential professional customers. The acquisition is estimated to increase Home Depot’s “total addressable market” to about $1 trillion, a $50 billion increase.
Berkshire Partners invested in SRS in 2013 and sold a majority stake to Leonard Green & Partners in 2018. Recently, on March 31, 2024, SRS raised $6.94 million through debt financing.
With SRS reporting approximately $10 billion in revenue in 2023, the acquisition’s implicit revenue multiple was 1.83x.
Growthink Capital’s New Mandates
The Growthink Capital team is working with an operator seeking to acquire asset-light services businesses in large, fragmented industries with strong repeat revenue dynamics.
Examples include legal back-office services, tree care and landscaping services, and professional education businesses (across any verticals, excluding software businesses).
The target businesses should be U.S.-based, bootstrapped (i.e. established without substantial external capital), and have operating profits exceeding $2 million.
Interested owners are encouraged to connect directly if this acquisition opportunity aligns with their objectives.
The Oldest and the Newest
There were 8 companies founded in the 1800s that were acquired in June 2024.
McQuillan Home Services was acquired by Any Hour Services, supported by its financial sponsor Knox Lane, through a leveraged buyout on June 26, 2024.
McQuillan provides HVAC services to residential and commercial clients, including plumbing repair, water heater installation and maintenance, heating and cooling repair and installation, and electrical repair and installation.
Any Hour Services offers maintenance and repair services to homeowners in Salt Lake City. Their services include HVAC, plumbing, and electrical work, as well as repairs and replacements, helping customers maintain their homes at transparent prices.
Meanwhile, 17 companies founded, created, or spun off between 2023 and 2024 achieved exits last month.
Factoreal, a provider of a customer engagement platform based in San Francisco, California, was acquired by Satisfi Labs for an undisclosed amount on June 18, 2024.
Factoreal’s platform offers email marketing, SMS marketing, WhatsApp marketing, omnichannel chatbots, push notifications, forms, and landing pages.
This strategic acquisition accelerates Satisfi Labs’ vision of building a comprehensive Conversational Experience Platform, integrating both inbound and outbound messaging capabilities.
Growthink Capital’s Transaction of the Month
After last month’s acquisition of the Japanese restaurant chain Benihana, F&B acquisition activity remains strong with Blackstone’s acquisition of Tropical Smoothie Cafe, and Simply Good Foods’ (NAS: SMPL) acquisition of the plant-based protein beverage company Only What You Need for $280 million.
As of 2023, Tropical Smoothie Cafe had over 1,300 locations nationwide offering fresh food and smoothies, including wraps, sandwiches, flatbreads, and salads.
The company was acquired by Blackstone through an estimated $2 billion LBO on June 10, 2024, supported by an undisclosed amount of debt financing.
This acquisition positions the company for continued success and innovation, benefiting its guests and franchisees. With approximately $1.3 billion in revenue reported in 2023, the acquisition was conducted at an implicit revenue multiple of 1.54x.
To explore M&A alternatives for your business – whether that be pursuing a sale of the company, liquidity for shareholders, or growth-by-acquisition opportunities – please get in touch by completing this form or calling us at (213) 927-3968.
Securities transactions are conducted through GT Securities, Inc. Member FINRA/SIPC. Nothing in this article should be regarded as an offer to sell or a solicitation of an offer to buy any Investment.
