Recently, Merrill Corporation released their December and year-end reviews of M&A activity. Merrill is widely recognized as the premier technology provider for M&A professionals around the world.
Their analysis of 2018 was based on data gathered by Mergermarket, reportedly the largest network of dedicated M&A journalists and analysts in the industry. This allows the firm to provide the most comprehensive M&A intelligence service available today. As usual, their findings are compelling and detailed. Based on their research:
M&A value in the US and Canada through the first 11 months of 2018 exceeded the total from last year and is on pace to surpass the 2016 total as well. Unemployment in the US remains at the lowest level in nearly 50 years, and GDP grew 3.5% in the third quarter on the back of robust consumer spending. Companies continue to report strong earnings, thanks in part to the US corporate tax cut to 21% earlier this year.
This data can be seen graphically in the following chart:
A key segment of buyers also had a phenomenal year – private equity firms. Again, according to Merrill’s research:
Private equity is closing the year in a position of strength, with global buyout value on pace to match or surpass the amount reached in 2017, when a post-crisis high was reached. PE firms continue to raise record amounts of capital, as investment demand grows ever higher.
It is clear from this data that 2018 was a continuation of the M&A seller’s market, one of the longest, and strongest, we have seen in years. Unless some very potent economic changes hit, or some geopolitical crisis rears its ugly head, buyers will continue to be very aggressive in 2019.
However, as we have said many times over the past 12 months, a seller’s market only benefits sellers. If you are a business owner today, your company is probably at its peak valuation (assuming it is growing, profitable and not in an obsolete industry). Sadly, based on our experience, most business owners lack one key fact: The knowledge of the business enterprise value of their company.
For this reason alone, even if your plan is to exit in 5-10 years, it is critical to receive an estimated valuation of your business, if for nothing more than to aid in wealth planning. The good news is that this is a service we provide all our clients before taking them to market. In fact, many choose not to go to market right away in order to build their company’s economic value after obtaining a valuation from our team.
Our firm was awarded Investment Banking Firm of the Year three years in a row, most recently in 2018. Further, our valuation team has won Valuation Firm of the Year from the M&A Advisor several times, most recently in 2014. So, our advice to business owners is sound and based on years and years of M&A experience.
If you are interested in determining your company’s current business enterprise value, please contact us at 972-232-1121. Or you can visit our website, provide your contact information, and we will reach out to you to have a conversation about our services and how they can benefit you.
A special thanks to Merrill and Mergermarket for confirming that the seller’s market remains vibrant and strong!
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2021 Generational Equity, LLC. All Rights Reserved.
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
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
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
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
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.
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.
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
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.
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
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 quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
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 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
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
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
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 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
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 thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
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
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 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 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
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