Officials for Springfield-based Guaranty Federal Bancshares Inc. (Nasdaq: GFED) announced in early December the first full bank acquisition in its history. Through the purchase of Carthage-based Hometown Bancshares Inc., Guaranty Bank would add seven branches and $183 million in assets, while entering the counties of Newton and McDonald and strengthening its existing presence in Jasper County.
The banks were not alone in merger and acquisition activity in the local financial sector.
Arvest Bank on Aug. 22 agreed to purchase Bear State Bank’s parent company for $391 million. That deal, the largest in Arvest’s history, is finalizing. And in October, Pine Bluff, Arkansas-based Simmons First National Corp. (Nasdaq: SFNC), the operator of six Simmons Bank branches in Springfield, announced it had closed more than $1 billion worth of acquisitions.
Michael Cosby, a mergers and acquisitions attorney for Husch Blackwell LLP in Springfield, said the rate of deals locally was up by 4-5 percent in 2017, compared with the prior year. On a national level, M&A activity produced a mixed bag.
According to PricewaterhouseCoopers’ M&A year-end review and 2018 outlook, middle-market deals nationwide increased 11 percent in 2017 to 12,784 from 11,486 in the prior year. That accounts for M&A activity by companies in the $10 million to $500 million revenue range.
However, megadeals, those valued at $1 billion or more, dropped by a third to 38 transactions in 2017, the PwC report found, citing data by Thomson Reuters Corp.
Cosby predicts the number of local deals will remain consistent into 2018 – “as long as the economy continues to improve,” he said.
Some larger entities, such as multinational professional services network Deloitte, expect a larger influx.
“Corporate and private executives foresee an acceleration of merger and acquisition activity in 2018, both in the number of deals and the size of the transactions,” Deloitte’s report, The State of the Deal: M&A Trends 2018, reads. “Bottom line: The M&A outlook for 2018 is positive.”
Looking back, 2017 was a notable year for mergers and acquisitions across all local industries, Cosby said.
“I don’t know if there was any industry concentration,” he said. “It appeared to be quite broad.”
In retail, Bass Pro Shops in September finished off its $5 billion purchase of Cabela’s Inc., growing its store count to 184 from 99.
On the technology side, Aurora, Colorado-based business service provider Avitus Group absorbed information technology firm Layer 3 Technology in September and businessman Doug Pitt in October repurchased the office assets of ServiceWorld Computer Center, after selling the business to TSI Global Cos. LLC four years ago. It now all operates under Pitt Technology Group LLC.
“I get my baby back,” Pitt told Springfield Business Journal at the time. “We’re going to go back to the basics.”
Also, in late December, Jack Henry & Associates Inc. (Nasdaq: JKHY) finalized the $130 million acquisition of Redwood Shores, California-based Ensenta Corp., a cloud-based mobile and online payment provider. In the previous quarter, Jack Henry executed another purchase – Florida-based Vanguard Software Group and its roughly 40 clients.
The tech sector is where PwC, another multinational professional network, predicts a high-growth year.
“Emerging technologies, such as artificial intelligence, will not only upend how we do business but also change the way we work, particularly as the population ages and traditional ideas of the workforce evolve – all of which could affect how potential acquisitions are evaluated,” analysts wrote in the PwC report.
Analysts at Deloitte anticipate technology acquisitions as the new No. 1 driver of M&A activity, overtaking expansion of customers in existing markets or adding products or services.
Pitt said he’s noticed some trends on his own: Tech companies have been taking a beating. Some have sold assets as “part of its exit strategy or its survival mode,” he said.
He’s also observed fewer but larger mergers and acquisitions.
“I think that trend’s going to continue,” he said, praising companies’ holistic and personal approaches. “You still need a hands-on touch. The companies that are the holistic ones are the ones that will stay.”
In addition, Deloitte predicted technology will continue to converge with other industries such as health care providers, telecommunications and retail – which could mean bad news for brick and mortar stores. During 2017, store closing announcements reached a record 7,000, according to think tank Fung Global Retail and Technology. BankruptcyData.com also reported retail bankruptcy filings totaled 662 in 2017, a 30 percent increase from 2016.
“It really is a matter of consistent economic performance,” Cosby said of healthy retailers and other business activity.
Businessman Pitt said the Springfield market – on the lower value of deals aside from the historic Bass Pro acquisition – has reflected national trends.
“The stock market and the economy – that’s a tide that raises all ships,” he said. “I expect now with the tax package that the company growth and activity will continue.”
COVID-19 threatens boxer's dream to help at-risk kids.
Security and patrol companies offer varying degrees of services and expertise. Natalie McGuire, Owner of Task9, recommends questions you should ask when vetting security and patrol services. Officer …
Cristian Rath, consultant with Abacus CPAs, LLC, says if you feel your goal is unattainable, work backwards to find the smaller steps to achieve it. He says you need to celebrate small victories on …
Lynne Meyerkord, executive director of the AIDS Project of the Ozarks says the pandemic has forced them to make a lot of changes. She says their federal grant money is currently secure, but she’s …
Nicole Chilton, director of marketing and development with the Springfield Regional Arts Council, says a great arts community helps draw talent to an area. She says the arts bring in $29.8 million to …
Eddie Gumucio, organizer and founder of the Queen City Shout Music festival says his wife’s experience with poverty relief agencies helped expand the number of nonprofits they could help. He says …
Author and Consultant Rosie Ward, Ph. D., says the “firms of endearment” are breaking the mold by nurturing culture and investing in employee training and well-being. Focusing on purpose over profit shows …
Abe McGull, assistant U.S. Attorney, says one of the most useful skills he learned in the military was planning. McGull says having a plan for any contingency allows you to be proactive rather than …
Gary Gibson, general manager of City Utilities, says the themes of individualism and doing right for the right reason from Ayn Rand’s The Fountainhead have stayed with him over the years. Gibson …
Jason, John and Jeremy Chapman, owners of The Acoustic Shoppe, decided to look for opportunities when the pandemic forced them to temporarily close shop. They chose to focus on online sales and …
Toni Robinson, president of Springfield NAACP says they learned early in their career to practice listening and humility. Robinson says these abilities are critical to being a good leader. Robinson …