Recently Axial, a leading online platform that matches capital providers with business owners, analyzed a growing trend that we too have been seeing the past several years: Offshore buyers with keen interest in U.S.-based companies of all sizes.
The United States is the world’s number one investment destination. Foreign direct investment in the U.S. reached a record $348 billion in 2015.
We predict the appetite for U.S. acquisitions will continue to grow in 2017 and beyond. According to a recent Baker & McKenzie report, cross-border M&A made up 44% of all deal value and 34% of all U.S. deal volume in Q3 2016, compared to 41% and 36% for the same period in 2015.
The level of international buyer interest in our transactions is likewise at an all-time high. In fact, we have more international buyers registered in our 34,000-buyer database than ever before. And this number keeps on growing.
There are a variety of reasons. First, despite our slow economic growth post-recession, the U.S. is still the largest, most stable economy in the world. This is something too many business owners overlook when marketing their businesses. Foreign buyers want “into” the U.S. because they gain access to a very desirable market.
Secondly, the breadth and girth of the U.S. economy assures most buyers of access to literally hundreds, if not thousands, of new clients post-acquisition. This is a tremendous benefit of acquiring a U.S. domiciled business.
According to the U.S. Commerce Department, “Foreign investors value the country’s skilled labor force, diverse consumer markets, research universities and a predictable, stable regulatory system.”
The real issue when you think about buyers for your business is creativity – are you imaginative enough to cast a wide net that includes offshore buyers, or are you content with simply hoping you find enough domestic targets to work with? This is a vital question and one that you need to consider carefully.
Where can you start this process of creatively thinking about buyers? At a Generational Equity exit planning conference. One of the topics we cover is how to think about offshore buyers and what to expect when you approach them. If you would like to become far more versed in exit planning and M&A trends, contact us to find out how you and your partners can attend:
Investing a few hours of your time to attend will reap huge benefits later when you find the optimal buyer for your business.
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2017 Generational Equity, LLC. All Rights Reserved.
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