Recently Mergers & Acquisitions magazine met with Peter Lehrman, CEO of Axial, a network connecting capital providers/intermediaries with businesses seeking growth and investment. Because of his company’s role in the capital creation process, Lehrman’s perspective is unique in the M&A arena. Here are some key excerpts from his interview:
“I think private equity firms will be substantially more active this yearthan last year, unless markets continue to go off a cliff, and then they’ll continue to wait and pause. Unless the markets are cratering all year long, I think the big pause that a lot of private equity firms took last year will end. A lot of them have a lot of capital that they raised last year or in 2014, and if the broad equity markets are down 15 percent to 20 percent this year, it will allow them to become active again, because they will be able to price and win deals at valuations that they are more comfortable with.”
As for activity, Generational Equity concurs with Peter—so far this year we have seen no lessening in demand or interest from private equity firms. In fact, far from it. Many are moving fast to acquire businesses before the Fed raises interest rates later this year. Even if the Fed does not act again in 2016, the idea that they might is highly motivating to equity firms that finance most of their transactions.
Mr. Lehrman also discussed an industry he expects to see solid growth in transactional demand:
“There’s obviously an elevated consciousness around global terrorism, but I think the political outcome this year is actually less important regarding that. Regardless of whether a Republican or a Democrat wins, I think the budgets, and C-level priority, for government agencies and companies around cybersecurity, data security, national security—those are all rising in terms of their importance … Regardless of the political outcome, I think there will be significant demand for businesses that provide products and services that help governments or corporations that manage security risks.”
He makes an excellent point: Unfortunately our world has become a less secure place over the past few decades. This is creating opportunities for companies that offer services designed to overcome these fears. If you own a company that is in the security/safety space, your business could be in demand right now.
Finally he also examined an ongoing trend that Generational Equity has been witnessing as well, which accelerated in 2015:
“There’s a constant and secular trend where more and more people are setting up their own boutique investment banks and private equity firms, where they’re doing deals on a deal-by-deal basis and they’re not raising funds. That’s been a trend for one or two years now, and I think that trend is going to continue to gather steam. The number of professionals who leave a blue chip financial institution and set up their own two-person, five-person operation, and become customers of Axial, that number is just continuing to become a larger and larger percentage of the customers that we serve.”
This is an interesting phenomenon that we have experienced, especially with family offices. Instead of pooling capital via limited partners into a traditional fund, more and more groups/individuals/families are making direct investments in lower middle-market companies because it allows them greater control and flexibility. However, because of the confidential nature of these operations, they don’t widely publicize their goals. We are aware of them because they come to us and tell us exactly who they are, what they are looking for, and their strategic vision regarding acquisitions. In fact, we have more than 34,000 buyers registered in our proprietary buyer database alone.
These are just a few of the trends Lehrman is seeing from his unique perspective with Axial. The reality is we are in the midst of one of the strongest seller’s markets in decades. Because of this we are encouraging every business owner to thoughtfully examine their exit strategies and plans. Since very few have a documented plan in place, attending an educational Generational Equity seminar is a great place to start the process.
Special thanks to Peter Lehrman and his thought leadership on current M&A trends!
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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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 educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
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 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 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
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
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 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 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 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 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
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
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.
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
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
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
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
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
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
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.
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 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
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.
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 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.
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
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