One of the most important questions nearly every player in the M&A industry is focusing on is this: Just how long will the current seller’s market continue?
Fortunately, we are at a point in the calendar when forecasters, analysts, and pundits are postulating the answer to this very question.
One of the most reliable sources of projected M&A activity we have found is Intralinks and their “Deal Flow Predictor – DFP.” Historically, when compared to actual deal announcements, their DFP has proven to be very accurate in predicting future M&A activity. And according to their latest quarterly update, here is why:
Intralinks is the leading global provider of Virtual Data Rooms (VDRs), for buy-side and sell-side M&A deal management and has been in business for over 20 years. Our involvement in the early stages of a significant percentage of the world’s M&A transactions gives us unique insight into the expected volume of future announced M&A deals. The Intralinks Deal Flow Predictor forecasts the volume of future M&A announcements by tracking early-stage M&A activity – sell-side M&A transactions around the world that are in preparation or have begun their due diligence stage.
What makes the DFP from Intralinks unique among most M&A forecasting tools is that it provides us with a snapshot of activity months in advance of deals closing, since these early-stage deals are, on average, six months away from their public announcement of closing.
They recently released their report estimating deal activity through the first quarter of 2018. Here is a summary of their findings:
The number of worldwide announced M&A deals is set for a fourth consecutive year of growth in 2017, driven by an extraordinary surge in dealmaking in North America (NA) that began in Q4 2016, following the election of US President Donald Trump. According to data from Thomson Reuters and Intralinks’ own analysis, the number of announced deals in NA in the first nine months of 2017 rose by 29 percent YOY. Every quarter since the end of Q3 2016 has seen NA announced deal count grow more than 20 percent YOY.
Worldwide M&A activity also looks set for a positive start in 2018, with our own Intralinks Deal Flow Predictor forecasting up to 6 percent YOY growth in the number of announced deals in Q1 2018. The dealmaking environment continues to be supported by a combination of a gradual pickup in global economic growth, subdued inflation in advanced and emerging economies, buoyant asset markets and historically low interest rates.
So, following another year of solid growth in 2017, dealmaking activity should remain buoyant going into the first quarter of 2018, at least based on Intralinks DFP. Given the historical accuracy of this data, it is reasonable to assume that the current seller’s market will continue into next year. And now, given the fact that tax reform legislation was passed, and we have clarity on a number of M&A related tax issues, any deals delayed in 4th quarter of 2017 will most likely be aggressively closed.
However, this data means little to business owners who have no exit strategy in place. The only way to take advantage of this current environment is to explore your exit options NOW. Keep in mind that unless you want to conduct a fire sale and sell to the first (and only) buyer that approaches you, closing a transaction with an “optimal buyer” takes 9-14 months from when you start the process. Realistically, that places you towards the end of 2018 before your deal will be concluded.
Why do we emphasize the concept of an optimal buyer? Because an optimal business buyer is one that is worth the time it takes for you to find and negotiate with. This type of buyer will not only pay a premium for your company, but will also structure a deal that protects your interests and the legacy you have built in the business.
Generational Equity and its dealmakers have access to more than 34,000 buyers in its database, and thousands more via industry research databases. This allows us to not only know who is acquiring, but we also can answer the question of “why” they are acquiring. And the why is really the most important part of the equation. If a buyer is setting up a platform company and “adding on” to it via synergistic acquisitions, vertical and/or horizontal integration, or complimentary mergers, our dealmakers will most likely be aware of it as they create buyer lists for your company.
This is one of the reasons we are consistently one of the top ranked M&A advisory firms in North America year in, year out. Our ability to help our clients through a liquidity event is unparalleled.
And we are anticipating that 2018 will be another prime year for sellers to obtain top dollar for their firms.
If you are interested in learning how Generational Equity can help you realize your exit dreams, please contact us at 972-232-1121 or visit our website and provide us with your contact info and we will be in touch. The first step in our process is to have you attend one of our complimentary, highly educational, no-obligation exit planning conferences that we hold around the US and Canada on a regular basis. Even if you don’t end up using our services, attending one will give you an abundance of information you can use to start your exit planning process. You can research a location near you and see our typical agenda here.
Special thanks to Intralinks for providing such accurate and timely forecasts every quarter of pending M&A activity. But this information is only helpful to you if you act now and get your process started. Remember this: Exiting a company in an optimal fashion is a PROCESS, not an EVENT!
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2018 Generational Equity, LLC. All Rights Reserved.
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 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
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
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
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 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 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
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
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
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
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.
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 quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
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.
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
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
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
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
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 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
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 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
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
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
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.
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
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.
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