Recently the National Center for the Middle Market (NCMM) produced a compelling report entitled, “Let’s Make a Deal: 3 Reasons Why the Time Is Ripe for Middle Market M&A.” As always, their research and analysis were impeccable and their timing perfect, for we truly are in the midst of one of the strongest seller’s markets in quite some time.
The three reasons they outlined for why now is a great time for M&A transactions are very similar to facts we have covered before:
Now any of these individually would lend itself to creating a seller’s market; however, we have rarely seen all three converge at the same time. Let’s look briefly at each one of these.
Simply put, buyers are more active when they have confidence in the direction the economy is taking. They generally loath risk and try to minimize it as much as possible. Solid economic growth coupled with the new tax reform legislation, is giving them confidence (and the cash) to fund acquisitions as never before.
As the NCMM put it in the report, “Executives may also feel there is limited room for organic growth in their markets, so they look to M&A as a means to expand and acquire new capabilities and customers.”
Most M&A professionals will tell you that the fastest, most efficient way to grow an organization is via acquisition, not organic growth. The ability to add new talent, customers, vendors, and processes can be achieved much faster via a strategic acquisition. Savvy buyers realize this and are constantly looking for targets to acquire.
Finally, as the report states:
“According to data from Thomson Reuters, about $200 billion in private equity funds was waiting to be invested at the end of 2017, up from around $130 billion raised by the same time the year before. And middle market companies are the number one target for those funds.”
Far too many business owners discount the notion that a private equity firm would find their businesses attractive. Many owners focus on the billion-dollar deals that get all the press made by very large equity firms. The reality is a significant majority of deals closed are completed below $100 million in valuation, and a high percentage are even smaller than that.
On an annual basis, about 25%-30% of our clients are acquired either fully or partially by equity firms. And, since our entire focus is on M&A transactions in the lower middle market, we are in communication with buyers who specifically look for companies that are in our niche. In fact, we have over 34,000 buyers in our proprietary buyer database that have told us exactly what types of companies they are looking for.
Again, based on the three factors outlined by the NCMM, now is a PRIME time to consider your exit plans if you are the owner of a company today. Don’t let the rare convergence of these factors pass you by.
To learn more about the current seller’s market and trends driving it, you should set aside a day and attend a Generational Equity exit planning conference. These highly educational meetings are held throughout North America and are designed to help business owners understand how to exit their businesses for maximum profit at the appropriate time. Use the following links to learn more:
Remember: timing your M&A activity effectively is essential in pursuing a deal for the optimal value. Don’t delay in planning your exit while the market is still highly active.
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.