M&A Trends in 2022: A Great Time to be a Seller

By Generational Equity


At our Growth and Exit Planning Conferences, we are often asked to explain why M&A has held up strong so far in 2022 given all the uncertainty surrounding us and our economy. The answer is simple: turmoil creates opportunities and savvy buyers are taking advantage of them to grow market share, gain access to new technologies, and add experienced workforces to their stable of associates (along with a plethora of other reasons).

Recently Bain & Company released a study on mid-year M&A trends. Here are some of their conclusions:

Turbulence has increased since we launched our Global M&A Report six months ago, and it will likely continue throughout the year.

In the face of so much turmoil, it’s easy for corporate dealmakers to get conservative, yet the fundamentals exist for continued robust M&A activity.

Based on the first five months’ performance, 2022 will likely reach $4.7 trillion in deal value by year-end, which would make it the second-best year on record.

We believe that winning M&A teams will revise their M&A playbooks and deploy scenario planning that rigorously assesses the range of outcomes in five key areas of M&A uncertainty.

Interestingly, Generational is a bit of an outlier here, largely because of the niche we serve: middle market, privately owned companies the demand of which has never been higher. In fact, 2021 proved to be a record year for our firm and YTD our deal closings are 17% ahead of last year, which we expect to continue through the end of 2022 and beyond. Bain was reminded of a famous Warren Buffett quote as it looked at this data:

Warren Buffett reminds all investors in assets that the time to be greedy is when others are fearful—and that the time to be fearful is when others are greedy. These are turbulent and scary times, but they also are times in which the shape of many industries will be set for the next several years.

Buyers that we deal with regularly are of the same mindset: Now is one of the best environments to make acquisitions in years. Those sellers sitting on the sidelines waiting for “times to get better” will likely rue this strategy not far down the road as the seller’s market will eventually evolve into a buyer’s market.

So, the key question for you, if you own a business today, is where do you stand in relation to your exit plan? Do you have one in place? Is it in writing? Do you know the current economic value of your company? Do you have any idea of key intangible assets your firm has that can make it even more valuable? What do you want to do with the time left in your life post-exit? How much capital will you need to reach that goal?

These are critical questions that need to be addressed/confronted/analyzed and decisions made. Thankfully, Generational can help you on your journey. We have done so for countless business owners over the years and can do the same for you. Here are just a few of our examples for you:

To see a full sampling of all our clients we have helped to capitalize on their greatest asset, please use this link.

The important point to consider is that right now there are multiple buyers out there for every seller. This will gradually change as interest rates rise and the number of baby boomer business owners retiring increases. Don’t hesitate, act now! Contact us to find out how.

Carl Doerksen is the Director of Corporate Development at Generational Equity.

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