G.F. Gay Le Breton And Liam Norton
https://bit.ly/Chaffe-CB-Jan24
Louisiana merger and acquisition activity dropped in 2023, mirroring a disappointing global M&A market. Overall, the state saw 187 deals in 2023 involving a Louisiana target/buyer/seller announced or closed. This represents an 11.2% decrease from the 208 deals struck in 2022. Global M&A volume for deals done below $500 million value, the largest segment of deals by some margin, saw a decrease of 6%.
The biggest reason for the drop appears to be buyers and sellers disagreeing on price. Higher interest rates made debt financing more expensive, and lowered buyers’ estimated enterprise value for potential transactions. Sellers were seeing the higher equity values indicated by 2023’s stock market. Buyers also were holding off on deals until they had more clarity on the economy and the availability of financing.
The total value disclosed for Louisiana’s deals actually increased in 2023 over 2022 figures, with $15.53 billion in consideration reported. This value was spearheaded by five transactions eclipsing the $1 billion threshold. Most Louisiana transactions involved privately-owned companies that did not disclose sale price.
The largest deal of 2023 saw Baton Rouge-based home health and hospice care company Amedisys, Inc. agree to merge with Optum, a subsidiary of United Healthcare Group. In May 2023, Option Care Health extended an offer to Amedisys to purchase the company for a total of $3.6 billion in stock, valuing Amedisys at $97.38 per share, a 26% premium to the day-before closing price. One month later, Optum announced that it made an unsolicited, all-cash offer of $101 per share for Amedisys, valuing the company at over $3.8 billion at the enterprise level. Amedisys’ merger with Optum is expected to close in 2024.
In March 2022, Optum announced the purchase of LHC Group, a Lafayette-based health provider, in a deal valued at $5.4 billion. That deal closed in February 2023.
In total, roughly 18 or 9.6% of Louisiana’s 2023 transactions were health care-related, as the health care industry continues to consolidate. The state averaged 27 health care-related deals per annum over the previous five years, but the 2023 figure dropped with serial acquirors LHC and Amedisys no longer in the market. Other Louisiana health care companies participating in one or more deals in 2023 include Blue Cross and Blue Shield of Louisiana, Our Lady of the Lake Hospital in Baton Rouge, and Franciscan Missionaries of Our Lady Health System.
For the second year running, Louisiana’s most prolific participant in M&A markets was Bernhard Capital Partners, an energy- and industrials-focused private equity firm headquartered in Baton Rouge. In total, Bernhard and its portfolio companies announced thirteen transactions in 2023, five of which were $100 million+ deals.
In January 2023, Bernhard and other investors announced an agreement to sell Atlas Technical Consultants to GI Manager LP, a San Francisco private equity firm. Austin-based Atlas is a project delivery management firm for large-scale infrastructure improvement programs. The company grew out of the merger of three Bernhard investments, and it made more than 20 add-on acquisitions before it was sold on. Atlas appears to be Bernhard’s third liquidity event since the group’s founding in 2013.
Another prolific buyer was Argent Financial Group, which made five acquisitions in 2023. Argent expanded its nearly $40 billion in assets under management to over $65 billion by year’s end. Acquisitions included TMI Trust, Pinnacle Wealth, Orleans Capital Management, an undisclosed book of oil & gas royalty trust business, and the wealth management division of Ameris Bank.
Argent CEO Kyle McDonald stated that the 2023 acquisitions were aligned with the company’s overall strategy to diversify its services and revenue streams in order to continue building a sustainable company that will serve its clients for generations. McDonald went on to say that, “For every deal that we did, Argent was familiar and comfortable with the management teams and how they did business.”
Founded in Ruston, Louisiana in 1990, Argent offers client asset services, including trust services, wealth management, oil and gas management, and special asset services/administration.
Looking to 2024, prospects for stronger M&A activity are improving with potential rate decreases by the Federal Reserve and more clarity on where the economy is heading. Corporate profits are generally improving as inflation cools and companies adjust to higher input costs and interest rates. Also, for those looking to put capital to work, deal financing is now more available, even if more expensive.
G.F. Gay Le Breton is managing director for Chaffe & Associates Inc., responsible for the corporate finance activities of the firm. Liam Norton is a corporate finance analyst with the firm. Investment banking services are provided by Chaffe Securities Inc., member FINRA/SIPC. For more information, visit https://chaffe-associates.com.