Amid a new wave of market volatility and expectations of a recovery, merger appetite is waning. In this climate, several companies are still looking for buyers, but it is unclear whether they will succeed.
So far this year, 6,245 mergers have been announced in the U.S., representing a 13% decrease in the number of deals compared to 2023, according to data from Dealogic as of August 8. These deals were valued at $966.5 billion, which is 24% more than the deals announced during the same period in 2023. Private equity deals reflect the same trend. The number of U.S. PE mergers decreased by 10%, while the deal value of $291.9 billion increased by 9% compared to 2023.
Just a month ago, bankers were very bullish on mergers and acquisitions, saying there were more companies lining up to do deals than in recent years. That changed last week. Fears of an economic slowdown sent the Dow Jones Industrial Average down 1,000 points on August 5. (On Thursday, new jobs data helped the broader stock market recover, and the Dow gained more than 700 points.) CNBC reported.)
“It’s been slow in recent weeks. Market volatility hasn’t helped,” said one banker, who described the current environment for transactions as “tiring.”
Corpentric is in the game
The companies are still trying to close deals. One company said to be up for sale is Corcentric. The Cherry Hill, New Jersey-based payments company has hired advisers and is expected to begin proceedings later this year, according to five private equity and banking executives. “As a corporate policy, we do not comment on rumors or speculation,” a Corcentric spokesperson said.
Founded in 1996, Corcentric offers B2B commerce software for large enterprises and the mid-market. Private equity firm Bregal Sagemount invested $80 million in 2020. A year later, Corcentric was one of many companies looking to participate in the SPAC boom of 2021.
According to our calculations, Corcentric has attempted to go public twice. In 2016, the company, then known as AmeriQuest Business Services, filed for a traditional IPO but ultimately withdrew the deal.
The 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. Poor market conditions caused New Mountain and Corcentric to call off their merger in August 2022.
Corcentric is now looking for a new buyer but will likely sell for significantly less than the $1.2 billion it received in 2021. Corcentric generates EBITDA of about $50 million to $60 million and will likely sell for a single-digit multiple, they said. That means it could attract bids of about $500 million at most, they said.
Flywire and Nconracts test the market
Payment service provider Flywire could also be in the game. The Boston-based company has hired consultants to assess the interest of potential buyers. Reuters reported. Flywire, a payment processor, was also part of the Class of 2021. It was one of the nearly 400 companies that used an IPO to go public this year. The majority of these companies, including Flywire, are still trading below their IPO price. This poor performance led to a significant slowdown in IPOs. Flywire, which has a market cap of about $2.3 billion, did not respond to requests for comment.
There’s also Ncontracts, which has been up for sale for several weeks and is close to finding a buyer, according to four banking and private equity sources. Founded in 2009, Ncontracts provides governance, risk and compliance management software to more than 4,000 financial institutions, mortgage lenders 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. Since then, Ncontracts has acquired Quantivate in December 2023, QuestSoft in January 2021 and Banc Intranets in August 2020. The Brentwood, Tennessee-based company could be sold for up to $400 million, it said.
Gryphon and Ncontracts did not respond to requests for comment.
