Far too many business owners overreact when they hear rumors of a potential recession, and far too often put their exit plans on hold only to regret doing so because they are often a year or more behind the next seller’s market when it hits. And this will especially be the case this time around as most economists predict it will be a very mild recession in 2023.
The reality is that companies are bought and sold no matter what economic rumors, trembles and rumblings are voiced by the pundits.
If you have a plan, it is vital to stick with it.
A really good example of “why” is Masonite. A recent article in The Middle Market’s online magazine explained it this way:
Despite inflation eating into consumers’ wallets, people continue to spend money on their homes. Masonite International Corp. (NYSE: DOOR), a maker and seller of doors, recently acquired Endura Products, a manufacturer of door frames and other door parts.
Masonite CFO Russ Tiejema explained the company’s acquisition and the company’s M&A strategy this way: “We’ve laid out in the last couple of years a new strategy for the business. We’ve been very much like a traditional building products company. Our business has historically been the door slab itself. We set out a strategy where we’re looking to address a broader part of the market and that market would be selling more door systems as opposed to just door slabs.”
Although the current economic rumor climate may push some buyers to the sidelines, Masonite is sticking with its M&A plan. “You can make a case that there are times when you don’t want to do M&A because it’s not a good economic time, but if the asset is strategically enough aligned with what you’re trying to accomplish and it’s only going to be available at that particular time, that’s when you execute the transaction,” Tiejema says. “I would argue that Endura is a little bit in that case. If it’s the right asset at the right price for the strategic aspect of the business, you move ahead. And that’s what we’ve done.”
So, you need to consider your business as an investment and think about it the way professional buyers do that have a plan. First, you need to create one. Secondly, stick with it. Finally, conclude it with a buyer that is of the same strategic mindset.
Of course, the crucial first step is creating an exit plan that matches your financial and personal goals. Your plan could be to finalize it a year from now or five years hence. Either way you need a plan that does two things: Develops accelerated value creation strategies and then, once in place, finds buyers that see the value in your strategic assets (and even the non-tangible assets).
Now you can do this alone, lots of business owners do, but many realize a few years later that they left chips on the table because they allowed a professional buyer to undervalue their entity. Or you can hire an M&A team to work with you on your journey and help culminate it in your best interests no matter what economic climate we may be in. In 2022, Generational was recognized by The M&A Advisor with several awards including:
Now these two awards are significant because they are peer awards, meaning our peers (competitors) in our industry recognize the significant work we do and because it shows our track record of success is no accident.
So, follow the lead of Masonite: Develop an exit plan, stick with it, and finish it grandly!
For more information about how Generational can help you do so, please look at the following links:
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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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.
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We were represented by Michael Goss with Generational. The due diligence was grueling and exhausting, but Michael propped us up and kept us motivated throughout the process. Debi and I continued to ask each other how we could possibly make it through this process without the assistance of Michael. Michael's professionalism and knowledge is absolutely amazing, and we are so blessed to have had him by our side as we made our future dreams come true.Bob and Debi Lee, Owners of BL Technology, Inc and BL Tl Services, LLC
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
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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.
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I decided to attend the conference and hopefully receive some guidance on how to structure an exit plan of my business. Upon arriving at the conference, I was so impressed with the presentation given by Generational Equity that I set a future appointment that week to discuss the possibility of selling my business with their Senior Managing Director David Robinson.JoAnn Ellis, Owner of Fondren 5 Star Kennels
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
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
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We had the pleasure of working with Mr. Ahmad Behjati Managing Director, M&A, for Generational Equity during our acquisition of Papa's Dodge in late 2021. Generational Equity and Mr. Behjati represented and marketed Papa’s Dodge. As our primary contact, Mr. Behjati was professional in every facet of this acquisition process, conveying valuable advice most times and assisting us in every step of the process.Rick Greene of Dobbs Equity Partners LLC
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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
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