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Predicted 4th Q M&A Deal Flow – Onward and Upward

By Generational Equity

Predicted 4th Q M&A Deal Flow

Despite (or in spite of) the rash of negative economic news hitting much of the world the last few weeks, (and especially the U.S. with a pending mid-term election complicating things even further) according to a leading source, SS&C Intralinks, the 4th quarter should be very robust for M&A activity – great news for owners of privately held companies ready to reap the benefit.

Here is how SS&C Intralinks, in their 4th Quarter Deal Flow Predictor (DFP), suggested that worldwide deal flow will look like in the current quarter:

After a relatively flat global growth period in early-stage mergers and acquisitions (M&A) deal volume since Q3 2021, Q2 2022 saw a resurgence in pre-announced M&A activity. While the quality of assets, financing challenges, and global geopolitical issues are certainly impairing the economic landscape, from our vantage point the markets have been unyielding in utilizing inorganic strategies to face these challenges.

The efficiency of organic vs inorganic revenue growth has been debated for decades, but looking through the lens of economic factors that may impact demand/supply/financing in many industries, inorganic growth will most likely become the avenue of choice for many firms in the ensuing months. Simply put, if your board is requiring 15% growth annually in the midst of a recession (or in the face of rumors of a recession) the fastest, most efficient way to achieve that growth is via acquisitions.

We anticipate that buyers will be very acquisitive for many months to come because of this. And in fact, we are seeing this in our own firm; 2021 was a record year for Generational, and so far this year our closings are up over 13% compared to the same time last year!

 For most of our readers, however, M&A activity closer to home (aka, North America) is more top of mind than ever. Here is SS&C Intralinks summary on that region of the world:

We are forecasting a double-digit recovery in North American volume in Q4, both compared against Q3 2022 and Q4 2021. The U.S. saw a strong resurgence in Q2 which eclipsed two-quarters of 2021 deal flow. Canada also outpaced volume compared to all of 2021, as Q2 saw a material uptick compared to every quarter last year as well as Q1 2022.

In a time of economic and political uncertainty, this is even more good news for owners of privately held businesses in North America. If your business is “buyer ready” and you have been contemplating your eventual exit, now is a prime time to move forward and hire an M&A advisory firm like Generational to assist you in your journey. This is true if you are ready to exit now or want to simply prepare your company to do so 5 or 10 years down the road. Our “cradle- to-grave” services can guide you throughout, here is how:

Our teams work with owners just like you to find optimal buyers no matter the prevailing political and economic uncertainty. As Intralinks has shown, the following months will provide you with opportunities if you are wise enough to pursue them!

About the DFP: The SS&C Intralinks Deal Flow Predictor provides Intralinks’ perspective on the level of early-stage M&A activity taking place worldwide during any given period. The statistics contained in this report reflect the volume of VDRs opened or proposed to be opened, through Intralinks and other providers for conducting due diligence on proposed transactions, including asset sales, divestitures, equity private placements, financings, capital raises, joint ventures, alliances, and partnerships. These statistics are not adjusted for changes in Intralinks’ share of the VDR market or changes in market demand for VDR services.

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

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