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Brendan Cahill, Jin-Kyu Koh Quoted in Crain’s Detroit Business Special Report on Michigan M&A Market

Cahill Observes that Capital on Sidelines Creates Eagerness to Invest; Koh Cites Decline in Earnout Provisions in Middle-Market Deals

March 19, 2014

Two Detroit-based members—Brendan Cahill, Director of Dykema’s Automotive Industry Group, and Jin-Kyu Koh, leader of the Firm’s Corporate Finance practice—were quoted in a recent special report, published by Crain’s Detroit Business in concert with MBiz, on the state of the mergers and acquisitions market in Michigan. This special report appeared in the March 10, 2014 issue of Crain’s.

In an article themed “Early Moves, Ready Cash Signal Busy Year for M&A,” Cahill reports that early year activity suggests an increased deal flow in 2014. Cahill notes that the M&A environment is a blend of strategic buyers (who look to build markets with technology, customer access or geographic expansion) and private equity firms (who seek to draw upon their cash reserves).

“There’s lots of money available to be deployed,” says Cahill, “whether that’s on the balance sheet or in private equity funds, and Michigan companies are attracting high strong interest.” Cahill added that this optimism was originally reported in Dykema’s Mergers & Acquisitions Survey—published in October 2014—in which 68 percent of respondents expected the M&A market to be stronger in the next 12 months.

In another article within this special section—“High Expectations: Cash-Rich Buyers Create Seller’s Market on M&A Scene”—Koh notes that he’s seen a significant decline in the use of earnout provisions in middle-market transactions he has handled for privately held companies over the past year.

Expressing the believe that decreased use of the earnout provision traces to the leverage that business owners currently have in a seller’s market, Koh says, “The companies that are privately owned, they’re getting the valuation they need and that they want. If they don’t get the valuation, they just say no.”