In reality, this is a question that many analysts couldn’t even fathom back in March and April of 2020 when the economy went on various degrees of lockdown and travel became a challenge for dealmakers and buyers. However, an amazing thing happened: Buyers got even more aggressive the latter half of 2020; a trend we expect to see continue in 2021.
A recent article in the Financial Times summed up the last six months of 2020 this way:
A flurry of big deals in the last few weeks of 2020 drove global mergers and acquisitions to $3.6tn in 2020, representing an extraordinary rebound of takeover activity in the second half of the year.
The 2020 total value of deals is down 5 per cent from 2019, according to data from Refinitiv, but constitutes a dramatic recovery from the first half when the spread of Covid-19 brought deal making to a halt.
Companies struck more than $2.3tn worth of deals since the start of July, an increase of 88 per cent from the first half, according to Refinitiv. Activity in each of the third and fourth quarters of this year surpassed $1tn, marking only the second time since 2008 where deal making exceeded that level in consecutive quarters.
Our latter half of 2020 was also a record time for us. During those six months, we closed more deals than in any six-month period in our history AND 2020 ended up being a record year in terms of deals closed (actually our third record year in a row).
Now many of you reading this may be surprised at this news. You shouldn’t be. You see professional buyers, the kind of folks you want to acquire your company take a much longer-term view of the economy than most business owners. Many of you are so focused on the day-to-day operations of your business, that you lose sight of the future.
But buyers don’t. Remember (and this is especially key in today’s environment):
Sage buyers know that the old axiom is true: This too shall pass…
We may be bruised and battered a bit by it, but buyers will be undeterred, especially Equity Firms and Corporate Strategics that collectively had billions on their balance sheets to make acquisitions before the pandemic struck.
How many of you remember the housing crisis and subsequent near-complete meltdown of our financial system in 2008 and 2009? Although it took a few years to recover (since financing was hard to come by – unlike today’s environment), within a few years we were in the midst of one of the strongest M&A seller’s markets in ages.
Amazingly, based on 2020-year end data, we still are in a seller’s market and once the economy starts to fully recover in the third quarter of 2021, we expect the flood of capital into privately held businesses will be substantial.
The key though is this: You have to be building a “buyer ready” business now to take advantage of the pending full recovery and buying spree. Your ability to do so, while still in the midst of a pandemic is dependent on how much knowledge you have about what buyers are looking for in targets. Too often unknowing business owners focus on strategies that they think are building value, but they are not.
Fortunately, Generational and its team of professionals are here to help. We created Generational Consulting Group (GCG) about a year or so ago when we realized that business owners needed help conceptualizing how to build value, even during tough times. Have a listen to what a few of our GCG clients have to say about how our services are helping them:
To learn more about the full range of services we offer our clients (in additional to finding and negotiating with buyers, we also offer a Wealth Management Team that can help you preserve your new-found liquidity), reach out to us at 972-232-1121 or visit our website, leave your contact information, and we will be in touch.
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
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
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 quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
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
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.
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 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
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
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
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
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.
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
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
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).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.
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
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
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 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.
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.
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
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
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 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
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