Recently, Mergers & Acquisitions magazine ran an article that caught my eye. Written by Paul Aversano, Managing Director in Alvarez and Marsal’s private equity services practice, it focused on one key theme: why this year is a great year to be an investor in a company. He covered four good reasons:
Normally, any single one of these would be a good reason to be a buyer (and seller) in 2017. Taken together with one I would add:
All these factors make this an optimal time to be a buyer. Just take the second reason above, which relates to the financing of transactions. This is key because you can anticipate that in a year or so it will cost much more to finance a transaction than it will in 2017.
Keep in mind that few M&A transactions happen where the buyer pays all cash. In most cases, they are structured as a mixture of items including debt financing from a lender. And often it is the lender who has strict requirements that it places on the transaction before agreeing to finance it.
These same reasons combined also make this a great time to be a seller of a business. Keep in mind that the best time to sell or find an equity investor for your company is when buyers are active. The more active buyers are, the more they are willing to pay to invest in your business.
One of the keys to the success of the Generational Equity process is that we create as many “limited auctions” as we can for our clients. This is where we get more than one buyer interested in making an offer. As we develop this competitive process, it naturally raises the overall “value” of the business in the eyes of the buyer.
We discuss this important concept in great detail at our exit planning conferences. If this is a new idea to you and you own a privately held company, then I recommend that you attend one of our conferences in your area as soon as possible. You can locate our current list of meetings by using this link:
These are highly educational, require no obligation on your part, and can be extremely valuable as you begin to consider your exit plans and strategies. Please contact us to learn more.
And a special thanks to Mr. Aversano for providing some key insights into current M&A trends.
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2017 Generational Equity, LLC. All Rights Reserved.
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