In early February, SS&C/Intralinks (in conjunction with Mergermarket) surveyed over 300 dealmakers located across the world regarding their outlook for deal making this year. Here are some of their conclusions in the study:
In the first three quarters of 2021, USD 2.1 trillion was invested across 6,494 deals in North America. From a volume perspective, this puts the region, which is dominated by the U.S. market, in a similar range as Western Europe. But in value terms, no other region comes close, and this is a high not previously seen in North America.
The scale of the U.S. government and Federal Reserve’s stimulus program rapidly brought markets back to life following the H1 2020 collapse in stocks and M&A markets. Since then, activity has been on a tear in the U.S., this is not expected to abate in 2022.
Caveat One: Of course, we must realize that this survey was completed prior to the Russian invasion of Ukraine, and the subsequent shocks to the energy sector/stock market and the impact this may have short-term on U.S. GDP. This is not to mention the sheer human tragedy we are witnessing on a daily basis and the impact that may have on buyer and seller confidence in the shorter term.
According to analysis from GlobalData (a leading data and analytics company): The ongoing Russia-Ukraine conflict is expected to affect the completion of announced or planned cross-border mergers and acquisitions (M&A) deals involving targets based in Russia or Ukraine.
Aurojyoti Bose, Lead Analyst at GlobalData, comments: “The deal-making fundamentals remain unconducive for foreign acquirers at least for the near future as no buyer likes uncertainty and market volatility. Market volatility and an uncertain business environment on the back of the ongoing war may prompt foreign buyers eyeing Russian or Ukrainian targets to withdraw or revisit their acquisition strategies.”
However, it is unclear what impact this “uncertainty” may have on North American deals. Certainly, it will likely cast a pall on buyer activity in the next few quarters in European markets. Yet, as we have seen in the past, the U.S. and Canada are two of the safest markets to make acquisitions in, even if we do shave a few points off GDP over the next two quarters due to skyrocketing oil prices.
Buyers know that this situation too will pass, and as tragically as it appears to be impacting innocent civilians in Ukraine (and our hearts go out to them daily now), the overall demand by buyers to expand market share, gain access to skilled associates, and new technology will most likely continue to drive M&A activity in North America.
Of greater concern for many dealmakers in the U.S. is the planned increase in interest rates by the Fed. A quarter-point increase in 2022 will just get us back to pre-pandemic levels, so it most likely will not hurt M&A. Larger increases in 2023 could impact M&A.
Caveat Number Two: This could of course all change if God forbid, Putin resorts to even more destructive methods in response to the brave folks of Ukraine standing their ground. Only time will tell on that front, and we pray it does not come to pass.
Again, in times of uncertainty and unknown, it is often best to stick with your plans, and if you own a privately held company in North America today, keep your eyes on the longer term. And, if shocks to the economy do impact us, now, more than ever before, you will need the guidance of Generational and its highly talented team of consulting professionals with Generational Consulting Group.
If you have any questions about how our services could help you thrive over the next few months (or even years), do not hesitate to reach out to us to speak to one of our M&A professionals. Our team is extremely experienced in guiding our clients through a myriad of other challenges over the years!
Note on Survey: In Q2 2021, Mergermarket surveyed 300 dealmakers, including 225 corporates and 75 private equity (PE) professionals. Among those, 100 are headquartered in North America, 75 in EMEA, 75 in APAC and 50 in Latin America in order to produce this report.
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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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.
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.
The most important contribution I think Ahmad made was with his personality and work ethic. He is sincere, efficient, and very hard working. He was available to me at all times, whether it was for specific detail of the negotiation or just to talk through the bigger picture. He listened, advised, and recommended, but never forced his idea or opinions. In the time we worked together, he became a valued colleague and also a friend.Salvo Stoch, Founder and CEO of Sleeping Partners
Thanks to you, the entire GE team and especially Michael Goss for driving a great valuation, coaching me and driving the process across the finish line. Please let me know if there is anything I can do to support GE going forward. P.S. Given my experience with GE I felt comfortable enough to sign up with Generation Wealth Advisors!Tom Currier, Former President & CEO, Rackmount Solutions
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 educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
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
Through the sale process, Generational brought in several interested buyers and we closed in about 6 months. I am so glad I accepted that invitation to the conference and could not be happier with the whole process. The team at Generational coupled with their knowledge and guidance was so valuable that in the end, I know I could never have done this on my own!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
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
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
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 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
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 would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
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.
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.
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
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 wanted to take this opportunity to thank you for all that you have done for us. Not only did you take care of all the aspects of the sale but took extra care to make sure we knew what it looked like every step of the way. I will definitely recommend your company to anyone that is in a position to or looking to exit their business.Shane and Johanna Kline, Owners of Vision Upfitters
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
After attending a conference with GE, I decided that the value they bring would be worth the expense and as soon as I started working with them, I realized that was the right decision. When we started to get LOIs, Fred Zweifel took the lead on the communication and supported negotiations throughout the process, which got tricky as we moved forward. I learned that it can be common for companies to make a great offer then work to erode that price with their discoveries, but Fred and the GE team kept that from happening.Caroline Connelly, CEO, OptoTest
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 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
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
The professionals at Generational Equity then helped develop a roadmap for enhancing the value of the firm and an evaluation report. This was completed by June 14, 2021. We then developed the Confidential Information Memorandum and put Taylor Studios, Inc. on the market by July.Betty L. Brennan, President, Taylor Studios
Generational Equity’s professional staff helped me every step of the way. Their network and professionals are the only reason I sold my company this quickly. For me this is a once in a lifetime sale and I was unfamiliar with the process. I was able to lean on them with questions and concerns.
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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