The appetite for mergers is drying up amid a new wave of market volatility and as dealmakers wait for a rebound. In this climate, there are still several companies seeking buyers, but whether they will succeed is unclear.
So far this year, there have been 6,245 mergers announced in the U.S., a 13% drop in the number of deals compared to 2023, according to Aug. 8 data from Dealogic. These transactions were valued at $966.5 billion, which is 24% more than the deals announced during the same time period in 2023. Private equity transactions reflect the same trend. The number of U.S. PE mergers was down 10% while deal value, $291.9 billion, was up 9% versus 2023.
Just a month ago, bankers were very optimistic about M&A, saying there were more companies lining up to do deals than in the past few years. That’s changed in the past week. Fears of an economic slowdown caused the Dow Jones Industrial Average to shed 1,000 points on Aug. 5. (On Thursday, new labor market data helped the broadmarket rebound, with the Dow jumping more than 700 points, CNBC reported.)
“It’s been slow the last few weeks. The market volatility hasn’t helped,” said one banker who called the current deal environment “tired.”
Corcentric is in play
Companies are still trying to get deals done. One that is slated to go up for sale is Corcentric. The Cherry Hill, N.J. payments company has hired advisors and is expected to launch a process later this year, according to five private equity and banking executives. “As a matter of corporate policy, we do not comment on rumors or speculation,” a Corcentric spokesman said.
Founded in 1996, Corcentric provides B2B commerce software for enterprise and middle-market businesses. Private equity firm Bregal Sagemount invested $80 million in 2020. A year later, Corcentric was one of many businesses that sought to take part in the SPAC boom of 2021.
Corcentric, by our count, has tried to go public twice. In 2016, the company, when it was known as AmeriQuest Business Services, filed to go public using a traditional IPO but ended up pulling the deal.
Its second attempt came in December 2021 when Corcentric announced it would merge with North Mountain Merger Corp, a blank check company. The deal valued Corcentric at $1.2 billion. Bad market conditions caused New Mountain and Corcentric to call off their merger in August 2022.
Corcentric is now seeking a new buyer but will likely go for much less than the $1.2 billion valuation it received in 2021. Corcentric is pulling in about $50 million to $60 million in EBITDA and will likely sell for a single digit multiple, people said. This means it could attract bids of about $500 million at most, they said.
Flywire and Ncontracts test the waters
Separately, Flywire, a payments processor, could also be in play. The Boston company hired advisors to evaluate interest from potential buyers, Reuters reported. Flywire, a payments processor, was also part of the Class of 2021. It was one of the nearly 400 companies that used an IPO to go public that year. A majority of those companies, including Flywire, are still trading below their IPO prices. This bad performance caused IPOs to slow significantly. Flywire, which has a market cap of about $2.3 billion, did not return requests for comment.
There’s also Ncontracts, which has been up for sale for several weeks and is near securing a buyer, according to four banking and PE sources. Founded in 2009, Ncontracts provides governance, risk and compliance management software to more than 4,000 financial institutions, mortgage companies, and fintechs in the United States.
Gryphon Investors, a private equity firm, acquired Ncontracts in January 2020, when the company had over 1,300 customers. Ncontracts has since scooped up Quantivate in December 2023, QuestSoft in January 2021 and, in August 2020, Banc Intranets. The Brentwood, Tennessee company could sell for as much as $400 million, people said.
Gryphon and Ncontracts did not return requests for comment.
