The first quarter of 2022 delivered thirty-five reported behavioral health acquisitions, returning to average deal volume after a spike in activity to end 2021. Mental health and addiction treatment continue to be at the forefront of consolidation. We will highlight a few notable deals from the period.
The FOCUS Communications Service Provider Index (CSPI) once again ended up in negative territory after it dropped 7.9% in the past three months. This marks the third straight period where the sector posted a negative return.
The FOCUS Telecom Business Services Index (TBSI) continued to alternate between positive and negative returns each reporting period. Unfortunately, this period was a negative return as the TBSI dropped 7.5% in the past three months.This underperformed the 5.0% drop in the S&P 500 but outperformed the 9.1% loss in the NASDAQ over the corresponding time period. Over the past 12 months the TBSI is in the black with a small gain of 2.3%. However, this return lags both the 14.0% gain in the S&P 500 and the 7.3% gain in the NASDAQ over the past year. Sector multiples are relatively unchanged from a year ago. The TBSI’s revenue multiple held steady at 1.0x, while the EBITDA multiple ticked up slightly from 10.7x a year ago to 10.9x at the end of the current reporting period.
The FOCUS Carrier-Focused Telecom Technology Index (CFTTI) suffered a second straight reporting period in negative territory, although the decline this period was only slight at 0.3%. Even with this period’s decline, the sector still outperformed both the S&P 500 (down 4.2%) and the NASDAQ (down 11.5%) over this past three months. The sector still remains in positive territory for the full year with a gain of 12.6%. This gain lagged the 14.8% increase in the S&P 500 over the past year, but was higher than the 4.2% gain in the NASDAQ. Sub sector multiples ticked up slightly compared to a year ago. The sub sector revenue multiple went from 2.3x to 2.5x, while the sub sector EBITDA multiple expanded from 11.2x to 12.0x.
The FOCUS Enterprise-Focused Telecom Technology Index (EFTTI) dipped sharply into the red this reporting period with a three-month loss of 11.0%. While the broader market indices were down as well, the EFTTI still underperformed both the S&P 500 (down 2.0% for the period) and the NASDAQ (down 8.1% for the period). The sector still managed to remain in positive territory for the full year period with a modest gain of 4.1%. However, this once again underperformed both the 21.6% gain in the S&P 500 and the 9.0% gain in the NASDAQ over the corresponding time frame. Sector multiples closed out the period at 6.0x revenue and 23.5x EBITDA. Both of these represent slight declines from year-ago multiples of 6.3x revenue and 24.1x EBITDA.
Precision Metalworking is experiencing an unprecedented period of consolidation. The FOCUS Advanced Manufacturing team has assisted owners and buyers of industry participants on 19 transactions and has dedicated a team of seven professionals to assist business owners in the industry as they navigate this terrain. We provide M&A advisory services and locate the capital businesses need to grow. Our team is composed of seasoned investment bankers and advisors with extensive operating experience in manufacturing and distribution backed by a deep research team. Our latest newsletter introduces you to our well-versed and experienced Precision Metalworking team and discusses topics such as market highlights, our transaction activity, industry trends and much more.
The logistics industry has gone through a tremendous amount of turmoil since March 2020 and the volatility continues. Business owners are thinking about major players in the market, trends and how to stay competitive. Our quarterly report begins to address these topics.
Unfortunately, the FOCUS Communications Service Provider Index (CSPI) continued its downward slide in our winter reporting period with a three-month drop of 8.7%. This was despite a favorable market backdrop in which the S&P 500 gained 10.7% and the NASDAQ gained 8.3%. The situation is similar for the full year period.The CSPI posted an annual loss of 12.4%, while the S&P 500 and NASDAQ closed out the year with gains north of 20%. Not surprisingly, sector multiples are lower than they were in the year-ago period.The CSPI’s revenue multiple dropped from 2.9x to 2.7x, while its EBITDA multiple fell from 8.3x to 7.6x
The FOCUS Telecom Business Services Index (TBSI) returned to positive territory this reporting period with a strong three-month gain of 9.0%. This put the TBSI in between the 10.7% return in the S&P 500 and the 8.3% return in the NASDAQ over the corresponding time frame. The sector looks even better over the longer 12-month time frame. The 34.6% gain in the TBSI outstripped both the 26.9% gain in the S&P 500 and the 21.4% gain in the NASDAQ. In addition, sector multiples went from 0.8x revenue and 9.4x EBITDA in the year-ago period to 1.0x revenue and 11.0x EBITDA at the end of the current reporting period.