Recently one of the leading publications in our industry, Mergers & Acquisitions magazine, interviewed several leading M&A experts regarding their expectations for deal making in 2017 given the impact of a new Congress and president. As you would expect, dealmakers, strategic buyers, and equity firms are all fairly bullish on the impact that a Republican Congress and President will have on the economy in general and M&A activity specifically. Here are a few of the excerpts from this interview:
There’s going to be “a pickup in M&A,” says Jim Freedman, chairman, Intrepid Investment Bankers LLC, reflecting on the Republican Party’s winning the White House and both houses of Congress in the U.S. election…
“The general consensus is that there will be a reduction in taxes. There will be a reduction in regulation. There will be more of a pro-business philosophy. I think those are all good things for the M&A industry. I’m pretty bullish on what this means for the M&A business.”
“If people conclude, in the next several months, that the transition will foster some policies that will cause some economic activity, then we may see more M&A activity,” says Geoffrey Rehnert, co-CEO, Audax Group.
“My prediction is that it is going to accelerate M&A activity,” says David Bonrouhi, managing director, Calabasas Capital, referring to the election outcome. “Business owners are going to want to get deals done before any new initiatives get passed and slow things down.”
Dealmakers that I speak to with our firm, the Generational Group, echo these sentiments. You have to keep in mind that two things buyers of all types have to factor into their ROI (return on investment) valuation equations are risk and unknowns.
The first can be quantified somewhat when they create their discounted cash flow (DCF) models. For those of you unfamiliar with a DCF calculation, essentially your business starts with a risk-free return percentage and a variety of risk factors are considered that may influence a discounted rate on a potential sale. The higher the risk associated with a company, the greater the discount rate and the lower the valuation.
The second issue, unknowns, are nearly impossible to quantify via the DCF model, but can have a much greater impact on the psyche of buyers, and even sellers in many cases, than risk. Often the fear of unknowns will kill deals even more than risk factors will.
And certainly in 2016 we faced a bevy of unknowns, which were made even more problematic by one of the most contentious election cycles in recent memory. For many buyers and sellers, the wide divergence in the possible outcomes, even until the day of the election, caused pause and delay in transactions.
With all of that behind us, 2017 should provide a tremendous opportunity for both sellers and buyers to connect and close win-win transactions. I reprise what Mr. Freedman said earlier: “I’m pretty bullish on what this means for the M&A business.”
We concur. Now is the time for business owners who have been delaying their exits, many of them since the market crash in 2009, to move forward. As we all know, there are two kinds of owners:
Where you fall in relation to these two options is dependent on your ability to discern when and how to exit for maximum value. The Generational Group and its team of experienced M&A professionals can help you do just that. We are one of the leading lower middle-market investment banking firms, and attending one of our highly educational executive exit planning conferences will provide you with ample opportunity to begin your process.
Even if you believe your exit is five years out or longer, the reality is you need to start building a buyer-ready business today. How do you do that? You learn to think like a buyer and discover what adds value to a business. Attending one of our complimentary, no-obligation conferences will help you do just that.
To find out how to attend, please call us at 972-232-1121 and ask to speak to one of our Senior Business Advisors, or visit our website and provide us with your contact information and we will be in touch.
And let’s all hope that 2017 brings a high level of clarity and stability to our entire country and economy.
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2017 Generational Equity, LLC. All Rights Reserved.
it all started with a conference.
start your story today,
speak directly with one of our senior advisors +1-972-232-1121
The information we learn from customers helps us personalize and continually improve your experience. Here are the types of information we gather.
We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice.
Generational Group’s affiliates are all part of one corporate family, they work with one another and may work together to provide services to you. The sharing of your information among affiliates enables Generational Group to serve you more efficiently and makes it more convenient for you to do business with Generational Group. Generational Group is permitted by law to share information with its affiliates. All of our affiliates follow similar privacy policies.
For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Group may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Group. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Group at its office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Group may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Group does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Group will be deemed NOT to be confidential. By sending Generational Group any information or material, you grant Generational Group an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Group is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Our computer system protects personal information using advanced firewall technology.
Information Generational Group publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Group intends to announce such products, programs or services in your country. Consult a Generational Group representative for information regarding the products, programs and services which may be available to you.
Generational Group makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Group web site, please understand that it is independent from Generational Group, and that Generational Group has no control over the content on that web site. In addition, a link to a non-Generational Group web site does not mean that Generational Group endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, Trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Group BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Group.
Success, you have been added to our list.