Deals and IPOs

Corporate growth hard to come by in 2016: THL Partners' Scott Sperling

Companies eye M&A to expand growth next year: Pro

The hunt for corporate growth through acquisitions will continue next year as the outlook for earnings remains fairly negative, Scott Sperling, co-president of private equity firm THL Partners, said Monday.

Third-quarter earnings fell 0.7 percent, while revenues dropped 4.4 percent, according to Thomson Reuters.

"I think as we look into 2016, I'm not sure organic revenue growth is any easier to come by. I don't know if we're late cycle or midcycle. It's very hard to call," he told CNBC's "Squawk Box."

"If you look at duration, we're late cycle. If you look at movement from trough, we're clearly not late cycle. We're more midcycle."

With that in mind, companies will likely continue to look for acquisitions that are immediately accretive to earnings but also set them up to capture better organic growth in the future by making operations more efficient and focused.

Global M&A activity officially reached a full-year record of $4.61 trillion — the most since 2007 — on Dec. 4, according to Dealogic.

Asia M&A hits record, deals top $1 trillion in 2015

Private equity firms will continue to face challenges in acquiring assets as corporations remain willing to spend heavily for strategic acquisitions in the current low-growth environment.

However, Sperling noted that is not necessarily a bad thing, because assets held by private equity stand a better chance of fetching higher prices.

"As I look at it, it's been a great time to sell," he said. "You can find interesting transactions, but they're smaller and it takes a lot longer to put them together."

Sperling cautioned that initial public offerings of private equity assets should not necessarily flash a sell signal to investors, as IPOs represent a way for PE firms to reduce a company's debt. He noted that THL Partners will often hold the shares of the companies it takes public for years.