As we have discussed before, M&A activity shows no signs of slowing after a frantic acquisition binge in the last six months of 2020.
Based on activity Generational has seen for the first few months of 2021, we are anticipating another record year for our firm in 2021, as evidenced by:
NDAs = Non-Disclosure Agreements, signed by buyers prior to confidential seller information being released to any potential buyers.
LOIs = Letters of Intent, the next step indicating a buyer is ready, willing and able to move forward and begin the due diligence process. A Dual-Signed LOI is even stronger in that both parties have agreed, in general concept, to close a deal.
An 80% increase in NDAs coupled with a 75%% increase in Dual-Signed LOIs are both very good indicators that Generational (and its clients) are going to see a significant increase in closed deals in the latter half of 2021, and it’s likely this will carry over in into 2022. A 77% increase in the value of our Dual-Signed LOIs only adds fuel to the M&A fire!
Our experience so far in 2021 was confirmed recently by a webinar hosted by expertwebcast.com entitled “M&A Outlook 2021: Domestic and Cross Border Transactions". The experienced, well-qualified team of professionals on the webinar had one theme in common: The M&A industry is hot right now, especially for deals valued in the lower middle market!
Here are some excerpts from the panelists:
Pradeep Khurana – Co-founder and Managing Director of ContinuServe, LLC:
“There is a ton of activity in the lower middle market. Except for very, very large deals, all other sectors are active. Acquisitions are being driven by money pouring into PE firms and low interest rates are driving LPs to PE firms because financing deals is less expensive.”
“Multiples are high, the environment is frothy. A $2 Trillion Covid bill and potentially a $3 Trillion (proposed ) infrastructure bill will both be a huge stimulus in the economy for 2-3 years. This will be enough fuel to get through 2023 pretty easily. Because of this, I don’t expect to see a negative business cycle on the horizon for a couple of years. Expect 2021, 2022 and 2023 to be very strong years”.
Will Dowden – Managing Partner, KLH Capital:
“In the 2nd quarter 2020, everything was on hold. Then it took off. Everyone realized that the Pandemic was not the Apocalypse! Valuations are going through the roof right now because of demand. Lots of froth in the market. Discounts didn’t happen at the end of 2020. Won’t happen in 2021. Momentum continues and will be strong for quite some time.”
Jason Kim – Corporate Partner with Blank Rome:
“In the second half of 2020, the M&A market was very active. However, the first half was slow. Second half everyone was making up for lost time! The activity level is still high so far in 2021. Strategics and PE firms are both active in this seller’s market and will continue to be.”
“Are Foreign acquirors active? Yes, they are quite active in the U.S. right now. There are big war chests coming over to the U.S. from Asia looking for companies to acquire.”
Again, based on our closed M&A deal results in the first months of 2021, we concur with all of these opinions!
The key though to you successfully participating in the booming seller’s market we are experiencing is twofold:
Fortunately, Generational and its family of companies can help you with both areas. Building a buyer ready business, one that is going to generate optimal results for you and your family, is possible with the right guidance.
Generational Consulting Group can help you create tactical (short-term) and strategic (longer-term) plans that, if you implement effectively, will potentially have an immediate impact on the salability of your business and its growth both long and short term:
Helping you overcome the “hurdle” mentally of selling is a multi-faceted program with Generational, because we recognize that deciding to eventually exit the business you have created and grown is a very difficult one indeed. The process starts with education, helping you understand how and when you can exit for maximum value by attending a Generational Growth and Exit Planning Conference near you.
The second step is meeting with one of our experienced Managing Directors while at the conference to confidentially discuss your business, and personal and business plans. If we decide that our services can benefit you, our team of professional, award-winning valuation consultants will help you to better understand what the exit process could look like for you and what the economic value of your business is. Finally, from there, our deal making teams take over and guide you through the final phase: Finding a buyer and negotiating a deal.
One of the key reasons that Generational has been recognized for years as a leader in middle market growth and exit planning services is the quality and integrity of our process and people.
So, if you are interested in finding out how we can help you and your business become buyer ready, please call us at 972-232-1121, or provide us with your contact information and we will have one of our Senior Business Advisors reach out to you.
And special thanks to our friends with Expert Webcast for hosting a fantastic overview of M&A trends in 2021 and beyond. You can register to listen to the replay of the webinar here:
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!Andy Graham, Vice President, Modern Heating & Plumbing
Dear Chris and Andre, I just wanted to say thanks for all your help. Even though this process was not an easy one, it was comforting to know that I had a capable team standing beside me. You made me feel like we were almost your only client or at least the most important one. Thanks again, and I will recommend your service in the future.Shenille Engelhart, Owner – CLS Technology
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.Robert Evans, President and CEO of Mealtracker Dietary Software
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.Andy Graham, Vice President, Modern Heating & Plumbing
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.Larry Moore, Owner, A Company Portable Restrooms
I need to say an immense thank you to Don Ho for his stellar work ethic, attention to detail, and tireless effort. Also thank you to the whole crew at GE! Without you, Don could not do such a phenomenal job. We were shooting for closing and funding before the end of 2020, due to the uncertainty of the political landscape and taxes. I am happy to report we closed last week and will be funding tomorrow.Dr. Caty J. Catron PhD, RN, VA-BC – Owner, Vic The Picc, LLC
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Terry D. Wickman, President, Keytroller
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.Jay Dinnison, Owner of Sharpe Mixers
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.Robert Evans, President and CEO of Mealtracker Dietary Software
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.Karen S. Williams, CFO, BW Manufacturing
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.Terry D. Wickman, President, Keytroller
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.Michael J Polarek, President, Paragon Packaging
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”Karen S. Williams, CFO, BW Manufacturing
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
T.D., thank you so much! You are a great leader! I love how you are using your gifts and talents to better others. You are clearly a GREAT COACH! This 3 day session undoubtedly changed the future of our business, and very well may have been the sole catalyst to save my company, my health and my marriage! A genuine “thank you” from the bottom of my heart.Bryan D. Horn, Owner, Over Under Clothing
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.Michael J Polarek, President, Paragon Packaging
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
I am pleased that I was able to work with Andrew Byrd throughout this experience. From the first meeting we had in Minneapolis I felt that I was in good hands. His knowledge and expertise is second to none. He guided the process consistently throughout. I feel lucky that I was pared with Andrew and could not be happier that I chose Generational Equity to handle this major life event. Thank you Andrew and GenEq for everything!Eric Erlandson, Owner, Action Fastenings, Inc.
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.Pete L.
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