ACG Boston Member Joe Sparacino, BB&T Capital Markets, featured in Middle Market Growth's A Qualified Opinion

Joseph Sparacino heads the automotive aftermarket investment banking group at BB&T Capital Markets. With more than 15 years of experience in investment banking and corporate finance, he provides M&A transaction advisory services to private equity groups, their portfolio companies and other private and public companies.

How would you characterize the overall state of deal activity in the automotive aftermarket, and has it been on pace with 2015 activity?

Deal activity in the automotive aftermarket remained strong in 2016, with more than 130 deals disclosed in North America, in line with 2014 and 2015. Corporate buyers continued to invest in growth through acquisitions in just about all industry sectors, while private equity continued to make new platform investments. Factors driving M&A in the automotive aftermarket have remained consistent: corporate acquirers have generated strong cash flows for years and view acquisitions as a growth-oriented way to deploy capital, expand market share and streamline costs; meanwhile, private equity investors see a relatively stable, low-risk segment of the economy that has grown in 29 of the last 30 years. The sector is expected to grow 3 to 4 percent annually over the next five years. While not considered a highgrowth industry, the automotive aftermarket offers stability and consistency with outstanding risk-adjusted returns in just about all segments.