Duff & Phelps Releases 2015 Transactions Report
-- Report Examines Attendant Issues for Fairness + Solvency Opinions --
NEW YORK, July 13, 2015 - Duff & Phelps, the premier global valuation and corporate finance advisor, today announced findings from its 2015 Fairness and Solvency Opinions Report, which examines transaction structures recurring amongst its global clients and the challenges Boards of Directors face in fulfilling their fiduciary obligations.
“Two macro trends – stagnant growth and historically low interest rates – have contributed to an increase in certain complex transaction structures ranging from spin-off transactions and dividend recapitalizations to yield-based investment vehicles, among others,” commented Christopher Janssen, Managing Director and Leader of the Transaction Opinions practice at Duff & Phelps. “Boards of Directors and Committees contemplating these transactions need, now more than ever, independent financial advice. We published this report to help shed light on these transactions trends and certain key considerations for the companies pursuing them.”
Key findings from the 2015 Fairness + Solvency Opinions Report include:
- Corporate Spin-Off Transactions: There were 34 U.S. spin-off transactions in 2014, the highest number in 10 years. In 2015, there have already been 31 transactions announced through late June, spurred by a focus on alternatives to drive value and an increase in activist investor activity.
- Go-Private Transactions in China: In the past four years, more than 50 Chinese companies formerly listed on U.S. exchanges have been taken private, and this trend is expected to continue into 2016, given the gap in relative valuations between Chinese companies traded in the U.S. versus on China or Hong Kong exchanges, among other factors. Duff & Phelps has been engaged on over 15 of these transactions.
- Dividend Recapitalizations: As debt markets began to recover in 2010, the volume of leveraged loans directly related to dividend recap transactions for private equity owned enterprises rose rapidly, reaching a peak of $70 billion in 2013. Leverage ratios increased alongside rising company valuations. Based on Duff & Phelps’ proprietary deal data, average post-transaction leverage multiples reached a peak of 5.5x for 2014 and have contracted slightly through the first half of 2015.
- REIT Rollup Transactions: Investor interest in these transactions has increased substantially in recent years. The three largest REIT IPOs in history – Paramount Group, Douglas Emmett and Empire State Realty Trust – were all formed through REIT roll-up transactions. Although advantageous, these transactions have inherent conflicts of interest that need to be carefully managed, including the determination of the relative allocation of value post transaction that is fair to all investors, who must consent to the transaction before the final IPO pricing is set.
- Master Limited Partnerships (MLP): The MLP structure allows sponsors with stable, cash-producing assets to access capital and investors at a relatively low cost, which has led to a surge in activity in the MLP and YieldCo space. During 2013 and 2014, there were 38 MLP IPOs and six YieldCo IPOs, which raised over $50 billion when combined with follow-on offering.
View the full report
About Duff & Phelps’ Transaction Opinions Practice
Since 2005, Duff & Phelps has rendered over 1,000 fairness and solvency opinions for transactions with an aggregate deal value of over $2.2 trillion. Duff & Phelps ranks 1st for the total number of fairness opinions in the U.S. over the past five years and 3rd for the total number of fairness opinions globally in 2014, according to Thomson Securities Data.
About Duff & Phelps
Duff & Phelps is the premier global valuation and corporate finance advisor with expertise in complex valuation, dispute and legal management consulting, M&A, restructuring, and compliance and regulatory consulting. The firm’s more than 2,000 employees serve a diverse range of clients from offices around the world. For more information, visit www.duffandphelps.com.
M&A advisory and capital raising services in the United States are provided by Duff & Phelps Securities, LLC. Member FINRA/SIPC. Pagemill Partners is a Division of Duff & Phelps Securities, LLC. M&A advisory and capital raising services in the United Kingdom and Germany are provided by Duff & Phelps Securities Ltd., which is authorized and regulated by the Financial Conduct Authority.
- Alternative Asset Advisory
- Compliance and Regulatory Consulting
- Disputes and Investigations
- ESOP and ERISA Advisory
- Fairness Opinions
- Legal Management Consulting
- M&A Advisory
- Real Estate Advisory Group
- Restructuring Advisory
- Solvency Opinions
- Tax Services
- Transaction Advisory Service
- Transaction Opinions
- Consumer, Retail, Food and Restaurants
- Energy and Mining
- Financial Services and Asset Management
- Healthcare and Life Sciences
- Media and Entertainment
- Real Estate
- Technology and Telecom
- Alternative Assets
- Compliance and Regulatory
- Cost of Capital
- Disputes and Investigations
- Goodwill Impairment
- Legal Management
- Risk Premium
- Transfer Pricing
- Transaction Opinions
- Latin America
- U.S. / Canada