Not only was 2017 a record year for Generational Equity in terms of the number of M&A deals closed, it was also a record year in the U.S. and worldwide, according to Thomson Reuters. In fact, based on preliminary numbers, the total number of deals closed reached nearly 50,000.
Interestingly, the total value of closed transactions has actually fallen for the past two years in a row. What does this mean?
If you are good with math, you’ll know it means that the number of smaller M&A transactions closed has gone up over the past few years.
This is great news if you are an owner of a privately held middle market company in the U.S. and Canada today. Professional buyers have learned that the best way to grow, expand market share, and obtain new talent and technology is to do so via the acquisition of a number of smaller targets.
Simply put, it is far less risky to make ten $10 million deals than to try to hit a home run with one $100 million one. If one or two of the 10 transactions don’t succeed as planned, you still have a great chance to grow with the other 8. If the one large one falls through, you have bet the game and lost.
Far too few business owners don’t realize this fact. Since the M&A mega deals get the headlines in the business media and smaller transactions are largely ignored, most business owners are under the impression that buyers only look for larger transactions. In reality, this couldn’t be farther from the truth.
As we have discussed over the years, the vast majority of M&A deals closed are valued far below $100 million in transaction value.
If this is news to you, then you can learn a lot more by attending a complimentary Generational Equity exit planning conference soon.
These are designed to educate business owners on the facts vs. the fiction of exit planning, helping you get started down the path towards a successful eventual departure (or if you are not ready to leave yet, the addition of a deep-pocketed investor to help your company grow).
Our attendees tell us that these conferences are the most beneficial business meetings that they have ever attended. If you are interested in learning more or contacting us, use these links:
By Carl Doerksen, Director of Corporate Development at Generational Equity.
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