M&A Demand Remains Strong in 2016

By Generational Equity


Despite what you may hear in the mainstream business media, M&A activity has maintained its 2015 pace this year, especially for deals in the lower middle-market (which are typically companies valued below $100 million). This segment is not as dependent on the vagaries of billion-dollar deal financing and is driven by differing demand factors.

In fact, according to a recent interview conducted by Mergers and Acquisitions magazine with Jay Jester, Managing Director with Audax Group, demand in the lower middle-market has been “quite robust”. Here are a few ideas that Jay mentions in his video interview:

  • I am hearing a lot of people talking about a slow-down but we really haven’t seen it in 2016.
  • 2015 was a record year for us in terms of deal flow and closing deals; I was expecting a slowdown in 2016 but we actually saw a record number of opportunities in the 1st quarter of this year.
  • Any slowdown the market experienced earlier this year was largely driven by financing concerns at the higher end of the market (larger deals); the lower middle-market is insulated from that.
  • Deal financing has been far more robust at the lower end of the M&A market.

Based on our number of deal closings so far this year, we agree with Mr. Jester; demand for lower middle-market companies remains strong. In fact, we are on pace with our record year in 2015 at this point in the year. This is truly amazing given how robust the activity for our deals was in 2015.

So, for lower middle-market sized companies, the seller’s market continues. This is great news if you are the owner of a company in this size bracket. In fact, if you are considering an exit in the next five years and have revenue below $100 million, it is vital that you reach out to us to discuss our services.

We begin every engagement with an educational, exit planning seminar, which we find to be instrumental to bring business owners up to speed on the nuances of the process we will be potentially taking them through if they become clients. If they don’t, they retain the materials we present and in many cases, often find buyers without any representation simply using the information we provide.

Although we don't recommend that you try to sell your business on your own, we are confident that what you will learn will give a much better understanding of what you need to know about the selling process.

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

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