By: G.F. Gay Le Breton and Alexander Aguilar May 17, 2022
After a year of explosive M&A activity, the 2022 market has begun to cool, both locally and globally.
In Louisiana, only seven transactions were announced or closed during the month of April. Deal activity was down more than 50% when compared to the same month last year. For the first quarter of 2022, Louisiana deal volume was down 7% from fourth quarter 2021, with 52 transactions versus 56 transactions.
Globally, there were 10,529 deals in the first quarter of 2022, with a total valued at $692 billion, according to S&P Global. Compared to the fourth quarter of 2021, total deal value decreased 29% while the number of deals decreased 21%. When compared to the first quarter of 2021, total deal value decreased 27%.
Contributing factors to the M&A slowdown are rising interest rates, inflation and geopolitical uncertainty, as well as a decreased supply of money resulting from the Federal Reserve’s current monetary policy. The slowdown in the M&A ecosystem is signaling a recalibration period in which money will be more difficult to borrow and the speed at which deals close may slow. Valuations may plateau or decrease in light of these changing macroeconomic conditions.
Despite the low activity, three New Orleans-area companies announced or completed sale transactions in April.
SyncStream Solutions LLC was acquired by Birmingham-based OnCentive. Founded in Metairie in 2013, SyncStream has been a pioneer in providing solutions for healthcare and employment reporting and compliance. Their software simplifies compliance with the Affordable Care Act (ACA) which pertains to companies with at least 50 employees, and reporting for EEO-1, a mandatory report for employers of more than 100 people.
OnCentive assists businesses to identify and qualify for available business incentives and tax credits. The acquirer saw an opportunity to capitalize on synergies between the two, offering customers additional services.
“Adding SyncStream’s robust ACA compliance toolset into OnCentive’s expanding portfolio allows us to further increase clients’ profitability by increasing their government compliance and mitigating their financial risk,” said Shannon Scott, CEO and co-founder of OnCentive.
Kevin Anhalt, former SyncStream CEO, has assumed the position of chief revenue officer of OnCentive post-transaction. SyncStream brought 4,000 clients to the merger.
Also in April, the investment advisory firm Resource Management LLC was acquired by Kansas-based Creative Planning LLC. Resource Management had $1.9 billion of assets under management at the time of this deal, which brought the total assets under management at Creative Planning to more than $225 billion. Resource Management was founded in 1974 and led by Randy Waesche and Michael Zabalaoui.
The acquisition of Resource Management is Creative Planning’s fifth deal since the beginning of this year, and continues its strategy of rolling up RIAs. Creative Planning is participating in a long-running industry trend, with the intent to improve margins through economies of scale by centralizing functions like money management and branding. This acquisition is the second local RIA to be acquired since the beginning of 2022. Crescent Capital Consulting was acquired by CAPTRUST Financial Advisors in January.
Finally, Metairie-based BRK Insurance Group sold to Relation Insurance Services, Inc in a transaction structured as a sale of assets. BRK serves clients throughout Louisiana by providing employee benefits and commercial lines insurance solutions. Rick Grubb, former President and owner of BRK Insurance, will continue to lead the agency as it is folded into Relation’s Central Region. Relation Insurance Services is an insurance brokerage offering benefits-consulting and risk management services and headquartered in California.
G.F. Gay Le Breton is managing director for Chaffe & Associates Inc., responsible for the merger and acquisition activities of the firm. Alexander Aguilar is a financial analyst with the firm.
Investment banking services are provided by Chaffe Securities Inc., member FINRA/SIPC.