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Business Buyers and Small Transactions – The Truth About Deal Size

By Generational Equity

Piggy Bank Seesaw

One of the most dangerous misconceptions that business owners make is that acquirers of businesses are only interested in very large transactions. This mistaken belief is easy to understand since the business press generally only publicizes billion-dollar, mega deals.

As we have seen over the years, the reality is that the vast majority of businesses acquired are much smaller than most folks imagine. This data was once again confirmed by the latest PitchBook summary of 2016 M&A transactions:

Source: PitchBook 2016 Annual M&A Report

As you can see, in 2016 nearly 70% of deals (on average) were valued at less than $100 million. Think about that for a moment. As deals get smaller, they are rarely publicized or tracked by any source like Pitchbook. So, if all deals below $100 million were tracked, then the percentage of deals closed in this range would be much higher than 70%.

No matter how you slice and dice the data, the reality to business owners is this: If you own a privately held company, don’t assume that your business would not be a good candidate for acquisition just because your revenue is far below $100 million (or even $10 million).

Until you engage a professional M&A firm that can first value your company in today’s market and then guide you through your optimal options, you will have no idea who might acquire your opportunity.

How do we know this? Because we are approached regularly by business owners who tell us up front, “I cannot believe that anyone would find my company attractive,” only to be pleasantly surprised some months later to realize their financial dreams through a liquidity event.

This could be true for you as well. The best way to learn more is to attend a Generational Equity executive planning conference. Even if you don’t hire us as your advisor, you will learn a significant amount about how to approach buyers. Here are some helpful links to guide you through what we do:

By Carl Doerksen, Director of Corporate Development at Generational Equity.

© 2021 Generational Equity, LLC. All Rights Reserved.

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Bil MacLeslie, CEO, ipHouse
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Bil MacLeslie, CEO, ipHouse
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Robert Evans, President and CEO of Mealtracker Dietary Software
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Eric Erlandson, Owner, Action Fastenings, Inc.
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 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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Larry Moore, Owner, A Company Portable Restrooms
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
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Karen S. Williams, CFO, BW Manufacturing
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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Andy Graham, Vice President, Modern Heating & Plumbing
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Karen S. Williams, CFO, BW Manufacturing
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Jay Dinnison, Owner of Sharpe Mixers
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Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
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Michael J Polarek, President, Paragon Packaging
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Terry D. Wickman, President, Keytroller
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Bil MacLeslie, CEO, ipHouse
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Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
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Pete L.
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Larry Moore, Owner, A Company Portable Restrooms
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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Dr. Caty J. Catron PhD, RN, VA-BC – Owner, Vic The Picc, LLC
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Robert Evans, President and CEO of Mealtracker Dietary Software
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Ralph Noblin, President of Noblin & Associates
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Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
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