Behind the Middle Market Carve-Out Boom: Private Briefing

Tom Waldman, a shareholder in Stradling’s Corporate practice group and former Managing Director, Legal for Los Angeles-based private equity firm The Gores Group, was quoted in an article published on May 29th by The Deal, “Behind the Middle Market Carve-Out Boom: Private Briefing.” According to a recent study done by EY, 84% of companies plan to divest a unit in the next two years. With middle market purchases at an all-time high, carve-outs have taken a step up in the past few years, especially within the pharmaceutical, industrial and technology sectors. Waldman, whose practice focuses on private equity transactions, said carve-outs have been part of his deal flow for years. “One common theme in middle-market carve-outs nowadays is selling a legacy business in order to invest in new technology,” which has been increasingly common among technology, health care, information technology, drug development, and manufacturing industries. Waldman also mentioned that carve-outs are not limited to larger companies but have also become common among smaller private companies splitting themselves up, stating that “relatively small business will find that they want to refocus on new technology and sell a legacy business. It's sort of a newer trend that people are more flexible on how they look at opportunities to get value out of their business."