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Survey Says: M&A Professionals Are Optimistic!

By Generational Equity

M&A Professionals Optimistic

A recent survey of key players in the M&A industry by Dykema and the Association for Corporate Growth reflects the same trends we are seeing in our business:

M&A demand for middle market businesses will remain strong in 2021!

This is how Dykema/ACG summed up their findings:

Reflecting strong U.S. M&A activity in the first quarter of 2021, respondents to the Dykema and Association for Corporate Growth-Detroit’s Spring 2021 M&A Flash Survey overwhelmingly expressed optimism for U.S. M&A activity in 2021, with more than 70% expecting the U.S. M&A market to strengthen in 2021 compared to 2020.

Five key items were expected to fuel this growth:

Fuelling M&A Activity in 2021

Generational and its deal teams are experiencing another record year (following three consecutive record years), as evidenced by the following stats:

  • # of Generational Deal Closings - UP 18% over the prior year
  • Buyer NDAs - UP 67% over the prior year
  • Current Dual Signed LOIs - UP 65% over the prior year
  • $$ Amount of Current Dual-Signed LOIs - UP 67% over the prior year

NDAs (non-disclosure agreements) and LOIs (letters of intent) are both key documents that are signed at critical stages of the acquisition process. Generally, NDAs are initial indications of interest by a buyer signed to protect the confidentiality of the seller; LOIs are created before due diligence and are a good indication that a deal will most likely close in 60-90 days.

Each of these alone would signify a dramatic year for us and, more importantly, for our clients. Collectively, to have so many key categories increasing simultaneously (and in significant fashion) is indicative of just how much pent-up demand is out there among professional buyers for middle market companies.

But according to the Dykema/ACG survey:

One potential dark cloud looms large over U.S. M&A activity according to our survey respondents – potential tax increases in the U.S. Two of the top three threats to U.S. M&A in 2021 that our respondents are worried about relate to increased tax rates, at both the corporate and individual levels.

This issue is critical to you as you consider your exit. It boils down to this:

How much cash do you want (need) to retain, after taxes, once you close a deal with a buyer for your business? 

Given the complexity of this topic (and the critical importance it has to owners of privately held businesses), we strongly encourage you to meet with your tax and M&A professionals sooner rather than later.

Given the tax proposals already suggested by the Biden administration, it is safe to assume that corporate, individual, and capital gains taxes will potentially all increase after the current tax year ends. This is something that you seriously need to factor into your exit timing.

Thankfully, our clients have access to Generational Wealth Advisors, our wealth management team that works closely with our dealmakers to create wealth management plans long BEFORE a deal closes, enabling our dealmakers to negotiate the most advantageous tax reducing deal structures possible for our clients.

If you are interested in learning more about the current (and expanding) seller’s market, and how you can take advantage of it BEFORE proposed tax increases take effect, I would suggest that you reach out to us to attend a Generational Growth and Exit Planning Conference near you. Use the following links to learn more about how you can do this:

If you would like to see the entire results of the Dykema/ACG survey, you can download it using this link:

And special thanks to our friends with both Dykema and ACG for providing such a timely and thought-provoking survey!

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

© 2021 Generational Equity, LLC All Rights Reserved

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
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Karen S. Williams, CFO, BW Manufacturing
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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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
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Andy Graham, Vice President, Modern Heating & Plumbing
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Bryan D. Horn, Owner, Over Under Clothing
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.
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
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
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Pete L.
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Bil MacLeslie, CEO, ipHouse
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 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.
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
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Ralph Noblin, President of Noblin & Associates
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
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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Michael J Polarek, President, Paragon Packaging
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Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
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Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
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Larry Moore, Owner, A Company Portable Restrooms
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Robert Evans, President and CEO of Mealtracker Dietary Software
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Karen S. Williams, CFO, BW Manufacturing
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Terry D. Wickman, President, Keytroller
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Bil MacLeslie, CEO, ipHouse