For Seattle-based boutique investment bank Cascadia Capital, the frenzy of mergers and acquisitions and private equity investments in the region during 2014 really paid off. As one of the firms that facilitates the deals when businesses want to sell, acquire another company, or take on a private equity partner, Cascadia had a record year. The advisers there completed 26 deals totaling more than $1.2 billion. They look for 2015 to be even better.

Cascadia isn’t alone. Accounting firm KPMG surveyed M&A professionals and advisers across the nation and found 82 percent expect a client will initiate at least one acquisition in 2015.

Cascadia Chairman and CEO Michael Butler and Managing Director Christian Schiller talked about what was behind the stellar year for transactions and why 2015 could set new records.

Why was 2014 such a good year for M&As?

Butler: The deal size was slightly larger than normal— $50 million to $250 million. You’re seeing us move up market a little and you’re seeing the market in the Northwest mature a little bit.

How do you mean the market has matured?

Butler: I believe we have reached a tipping point in the Northwest. I think we finally have an ecosystem here of capital, services and products. When we started the firm in 1999, we went through the (dot-com) bubble burst and it was really rough. In 2008, when we went through the recession, there was still a critical mass of companies that were able to weather the recession.

You think that 2015 is going to be an even stronger year for M&A activity than 2014?

Butler: We think that 2015 is looking really, really strong for activity. If you think about market cycles and that a market has a 42-month up cycle, we’re at 17 months. That means we have another 27 to 28 months in the cycle. There’s a strong possibility it will be even better than this year.

What’s fueling the need for companies to do the deals?

Schiller: The average family company’s mentality. A family-owned company looking to sell its business might have received an average letter of intent in 2007 for $100 million but they waited. Then in the recession the valuation went down to $50 million. It was a particularly hard hit to take and they waited out the cycle. Now you’ve got the greed and fear equation. They feel a lot more humble and plan to execute on a succession strategy and are striving to hit that peak this time around. On the supply side, non-bank debt funds are driving huge amounts of debt to parlay into private equity deals.

You do deals across a number of industry sectors. Where did you see the most deals last year?

Butler: Tech and health care were very active. Consumer was active. Business services was active. Industrial — active.

Becky Monk  |  Puget Sound Business Journal

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