One of the most important conclusions that we try to have attendees at our exit planning conferences walk away with is this: Don’t assume that the buyer for your business will be your competitor down the street!
In fact, we suggest that you cast as wide a net as possible, including off-shore buyers.
“The U.S. M&A market remains attractive for foreign acquirers because of the predictability of the country’s legal system and the purchasing power of American consumers. Deal activity is expected to remain strong due to low costs of entry, potential for fast-paced growth, and the ability to transform companies easily.”
Based on the off-shore buyers our company deals with regularly, we would also add that a fairly stable political climate (compared to some parts of the world) and a solid, dependable banking/financing system also factor into overseas buyers’ minds. Clearly, off-shore buyers will likely be interested in U.S. based companies for some time.
“For M&A deals valued at $10 million to $1 billion in 2013, foreign entities made up 13.7 percent of all buyers of U.S.-based targets, according to data from S&P Capital IQ. In 2017, that number grew to 21.4 percent. In the first three quarters of 2018, foreign buyers constituted nearly 21 percent of buyers.”
That is an amazing statistic! This data clearly shows that foreign entities are more interested in middle market and even lower middle market companies than ever before.
Many of you, based on the quantity of press it receives, probably assume that many of these buyers are from China, and that the recent tariff wars and public scrutiny of deals with that country will negatively impact off-shore buying trends.
I am glad to report nothing could be further from the truth. In fact, China isn’t even the country with the most interest in U.S. based companies:
“Any slowdown in deals with Chinese or other foreign buyers may not affect the broader U.S. middle market because most foreign buyers are from countries that have not been deemed threats to U.S. national security. From 2013 to 2017, the top countries represented by foreign acquirers in the U.S. middle market, in order of deal share, were Canada, the United Kingdom, China, Germany and Ireland.”
And recently even buyers located in Japan have shown a tremendous interest in U.S. based businesses:
“Japanese companies are poised to have the “biggest year ever” in terms of the number of offshore deals, Koichiro Doi, JPMorgan Chase & Co.’s Japan M&A head, said in an interview. The U.S. will be the most sought-after destination, partly because it’s the largest market that’s growing, according to Doi, who said 2018 was the busiest year he’s had in his two-decade-long career.”
All of this is good news for owners of U.S. based companies. The only caveats are these:
Now, odds are good that you have little M&A deal-making experience. You probably are quite proficient at running your business, but you will likely only sell one company in your entire career: The one you are running today.
That is why we recommend you hire an experienced investment banking firm like Generational Equity to represent you. Our dealmakers are skilled and experienced in all three facets of international deal-making listed above. Over the years no firm has sold more lower middle market companies than we have, many of them to off-shore buyers. Our track record speaks for itself:
If you are interested in learning how our services will help you in your exit planning journey (and it really is a journey, not an event) call us at 972-232-1121 or visit our website, leave us your contact information, and we will be in touch.
Even if you do not use us, please be sure to cast a wide net for buyers of your business, including, if possible, off-shore firms. Your ability to obtain an optimal value for your company will depend on how aggressive you are in marketing your business.
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2019 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.
By submitting my name electronically and clicking the “submit” button, I understand that I am providing Generational Group, Inc., Generational Equity, LLC, Generational Capital Markets, LLC, DealForce LLC, their affiliates, representatives, contractors, etc. (“Generational Group”) my telephone number, which may include a number that is wireless and/or a number that is on a national, state, or other Do Not Call registry or list. I hereby consent and agree to receive telephone calls including any autodialed and/or pre-recorded telemarketing calls and/or text messages (telemarketing) from or on behalf of Generational Group at the telephone number provided. I further consent and agree that telephone calls may be made using automated technology such as an automatic telephone dialing system, artificial or prerecorded voice, or SMS text messaging. Consent is not a condition of purchase. I further warrant and represent that any telephone number provided is not on any state or national Do Not Call Registry and that by agreeing to these terms and conditions that if any number provided is on any such registry, I hereby consent and agree to receive telemarking calls and/or communications including any phone calls, text messages, URLs, links, emails, etc. to the telephone number(s) and/or any e-mail addresses provided. I understand that by entering my name in the electronic form provided, that I am signing my name as equally as if it was my handwritten signature and that it is my intent to provide an “electronic signature” as that term is defined in state and federal law, as well as industry practices for e-commerce.
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.