How Many M&A Transactions Close Per Year?

By Generational Equity


For the past few posts we have been looking at the results of the 2016 M&A Survey conductd by Deloitte a few months ago. We’ve looked at a number of related topics and today we are going to enlighten you on just how much competition your business will face as you approach buyers.

Deloitte surveyed 2,292 executives with U.S.-based corporations and private equity firms, and two of the questions asked caught my attention. Here they are:

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OK, so these are professional buyers, the kind of buyers you want to approach with your opportunity. As you can see, and this is really amazing to consider, 37% look at 6 or more targets every year and 27% close on six or more.

What does this mean to you? Simply this: If you approach buyers without professional M&A guidance, you are going to be thrown into a pool of dozens of other targets, many of which WILL be using M&A experts. This means that you will have to work very, very hard and create some great documentation in order to cut through all that noise and get your business noticed.

That is a real challenge if you are a professional deal maker; it is even more so if you are selling your first company ever. Most business owners close one transaction in their lives, and most have no idea going in what it will take. This puts you at a huge disadvantage, because, according to a recent study, privately held owners benefit dramatically by hiring an M&A advisor to guide them. Here is a summary of the study’s findings:

We find that private sellers that hire advisers receive significantly higher acquisition premiums.

Why does this happen? Because M&A advisors produce documentation that is believable, accurate and most importantly, in a format that professional buyers are used to seeing. This moves our clients, for example, to the top of the pile when a buyer is looking at a few dozen opportunities in an industry.

The important thing to remember as you think about eventually exiting your business through an M&A event is this: You will have lots of competition for the eyeballs of buyers. And you only get one chance to make a favorable impression. Don’t go cheap! After all, nearly your entire net worth is tied up in one asset, your business.

To find out more about the professional services the Generational Group offer, please follow these links, and if you have any questions after doing so, feel free to call me at 972-232-1125:

(You can read the entirety of the Deloitte 2016 M&A Survey here)

By Carl Doerksen, Director of Corporate Development at Generational Equity.

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