"We had expected strategic buyers to be more active, but financial buyers are beating them to the punch," O'Connor said. "Some $10 billion in equity capital just waiting for deals has a lot to do with it. And financial buyers haven't been afraid to pay strategic multiples-in the seven to 12 times EBITDA range-with banks more than willing to lend the cash."
Financial buyers are good for those sellers wanting to stay in the game.
"Most typically leave acquired management intact and in place," O'Connor said. "But they differ on how much accountability their management teams demand from the properties."
That's one reason why sellers shouldn't always go with the highest bidder, O'Connor said. "In a financial deal, it's truly a marriage, and sellers need to consider how good a fit a buyer is in terms of culture, leadership style and industry expertise," he said. "For instance, a buyer that already has experience in the seller's markets will be less likely to panic if revenues don't immediately meet expectations."