M&A is Back (EDITORS NOTE)

2015 was a busy year for merger and acquisition activity.

In fact, it was the busiest ever. According to data published by Bloomberg earlier this month, $3.8 trillion was spent on M&A activity last year, an all-time record.

The fourth quarter was the busiest, according to Bloomberg, with $1.3 trillion in transactions announced. That quarter surpassed the trillion-dollar mark for the first time since the second quarter of 2007, prior to the financial crisis.

Locally, Fayetteville firms DataRank (seller) and APEI Inc. (seller) were among the notable deals of several companies involved in M&A transactions, as was Parkway Bank of Rogers, which sold to Batesville-chartered Citizens Bank.

Is this a sustainable trend? I asked Fayetteville attorney Jim Smith, a founding partner of Smith Hurst law firm, who arranges M&A deals for a living.

His firm represented the three local companies listed above, and also served as legal counsel for several other local deals that weren’t publicly disclosed.

Smith said 2015 was the busiest M&A year he has encountered in the last 20 years, and it’s evident the right ingredients are in place for the boom to continue this year, both locally and nationally.

“There is certainly a strong promise of being another vibrant year, given several factors,” Smith explained. “The most important being the continued low interest rate and lending environment, and companies and private equity investors having significant levels of available cash to invest.”

Smith also shared his view that fears of investors becoming overzealous in valuing privately held companies are unfounded.

Acquirers are simply recognizing the favorable environment that exists, vetting the possibilities, engaging a target company and proceeding with pragmatic due diligence.

“In fact, from my personal observation, I’ve probably seen greater attention to those important aspects over the last couple of years than at any previous time,” Smith said.

M&A activity came out of the doldrums in 2015, and as 2016 progresses, we could see an even bigger awakening.