One of the most important questions nearly every player in the M&A industry is focusing on is this: Just how long will the current seller’s market continue?
Fortunately, we are at a point in the calendar when forecasters, analysts, and pundits are postulating the answer to this very question.
One of the most reliable sources of projected M&A activity we have found is Intralinks and their “Deal Flow Predictor – DFP.” Historically, when compared to actual deal announcements, their DFP has proven to be very accurate in predicting future M&A activity. And according to their latest quarterly update, here is why:
Intralinks is the leading global provider of Virtual Data Rooms (VDRs), for buy-side and sell-side M&A deal management and has been in business for over 20 years. Our involvement in the early stages of a significant percentage of the world’s M&A transactions gives us unique insight into the expected volume of future announced M&A deals. The Intralinks Deal Flow Predictor forecasts the volume of future M&A announcements by tracking early-stage M&A activity – sell-side M&A transactions around the world that are in preparation or have begun their due diligence stage.
What makes the DFP from Intralinks unique among most M&A forecasting tools is that it provides us with a snapshot of activity months in advance of deals closing, since these early-stage deals are, on average, six months away from their public announcement of closing.
They recently released their report estimating deal activity through the first quarter of 2018. Here is a summary of their findings:
The number of worldwide announced M&A deals is set for a fourth consecutive year of growth in 2017, driven by an extraordinary surge in dealmaking in North America (NA) that began in Q4 2016, following the election of US President Donald Trump. According to data from Thomson Reuters and Intralinks’ own analysis, the number of announced deals in NA in the first nine months of 2017 rose by 29 percent YOY. Every quarter since the end of Q3 2016 has seen NA announced deal count grow more than 20 percent YOY.
Worldwide M&A activity also looks set for a positive start in 2018, with our own Intralinks Deal Flow Predictor forecasting up to 6 percent YOY growth in the number of announced deals in Q1 2018. The dealmaking environment continues to be supported by a combination of a gradual pickup in global economic growth, subdued inflation in advanced and emerging economies, buoyant asset markets and historically low interest rates.
So, following another year of solid growth in 2017, dealmaking activity should remain buoyant going into the first quarter of 2018, at least based on Intralinks DFP. Given the historical accuracy of this data, it is reasonable to assume that the current seller’s market will continue into next year. And now, given the fact that tax reform legislation was passed, and we have clarity on a number of M&A related tax issues, any deals delayed in 4th quarter of 2017 will most likely be aggressively closed.
However, this data means little to business owners who have no exit strategy in place. The only way to take advantage of this current environment is to explore your exit options NOW. Keep in mind that unless you want to conduct a fire sale and sell to the first (and only) buyer that approaches you, closing a transaction with an “optimal buyer” takes 9-14 months from when you start the process. Realistically, that places you towards the end of 2018 before your deal will be concluded.
Why do we emphasize the concept of an optimal buyer? Because an optimal business buyer is one that is worth the time it takes for you to find and negotiate with. This type of buyer will not only pay a premium for your company, but will also structure a deal that protects your interests and the legacy you have built in the business.
Generational Equity and its dealmakers have access to more than 34,000 buyers in its database, and thousands more via industry research databases. This allows us to not only know who is acquiring, but we also can answer the question of “why” they are acquiring. And the why is really the most important part of the equation. If a buyer is setting up a platform company and “adding on” to it via synergistic acquisitions, vertical and/or horizontal integration, or complimentary mergers, our dealmakers will most likely be aware of it as they create buyer lists for your company.
This is one of the reasons we are consistently one of the top ranked M&A advisory firms in North America year in, year out. Our ability to help our clients through a liquidity event is unparalleled.
And we are anticipating that 2018 will be another prime year for sellers to obtain top dollar for their firms.
If you are interested in learning how Generational Equity can help you realize your exit dreams, please contact us at 972-232-1121 or visit our website and provide us with your contact info and we will be in touch. The first step in our process is to have you attend one of our complimentary, highly educational, no-obligation exit planning conferences that we hold around the US and Canada on a regular basis. Even if you don’t end up using our services, attending one will give you an abundance of information you can use to start your exit planning process. You can research a location near you and see our typical agenda here.
Special thanks to Intralinks for providing such accurate and timely forecasts every quarter of pending M&A activity. But this information is only helpful to you if you act now and get your process started. Remember this: Exiting a company in an optimal fashion is a PROCESS, not an EVENT!
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2018 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.