A few weeks ago, according to the online magazine CFO Dive, and a survey by consulting firm BDO, most middle market CFOs weren't too worried about an economic downturn this year, and instead were preparing to focus on growth. Fewer than 20% of CFOs thought the economy would tip into recession, and only 11% had made preparation a top concern.
Note: This survey was conducted before the fear of a coronavirus pandemic was raised. However, the underlying issues driving M&A will not change and, in fact, may become even more paramount as time passes. Read on for more information.
Most importantly, 25% of those surveyed indicated that growth via M&A is planned in 2020.
That is a significant statistic indeed. Based on 700 middle market CFOs surveyed, a sizable portion are planning to grow in 2020 via acquisitions. This should play a substantial role in the continuation of our current seller’s market that we have been in for several years.
What I found most interesting is that one of the main concerns that CFOs had related to personnel matters. And what is really telling is how these personnel issues can be solved by a strategic focus on mergers and acquisitions. Here is how the article summarizes the findings:
CFOs are trying to find ways to address one of their most pressing concerns: hiring and retaining talent. In fact, the BDO survey finds workforce issues are the number two priority this year, behind only digital transformation. It broke out these workforce issues in six categories, ranked by how much CFOs expect to focus on them:
Each of the items I have bolded above can be significantly improved upon by a strategic acquisition program. You may not even be aware of it, but one of the most important intangible assets that acquirers are looking for is people. Especially talented, experienced professionals.
When was the last time you took a good look at your organizational chart? Have you ever done a skills analysis of your key players? And I am not just talking about your executive staff – I am referring to Larry who has been working in your shop for 25 years and has a wealth of experience and talent that many buyers will find attractive.
You might be sitting on a personnel gold mine and not even be aware of it!
One of the most important areas we cover with our clients during the evaluation phase of our process is the examination of “key” employees. The purpose of this is to determine if the client has some built-in intangible value in his/her associate pool. More often than not they do (and often without really considering it).
To accurately view the value of your employees you must begin thinking like a buyer. A buyer (a CFO for example) who is often troubled by a shortage of skilled workers, the difficulty in training and developing associates, and the huge challenge of attracting talent when unemployment is so low. What are they looking for in acquisition targets? Could your company be one of them?
So bottom-line: A good percentage of CFOs surveyed by BDO are planning to use acquisitions to address growth in 2020. And HR concerns are paramount to CFOs right now; the smart ones will use an aggressive M&A program to address shortages in talent.
Do you want to take advantage of this trend in 2020 and beyond? Since it appears that recession fears are now growing, we can assume the seller’s market will not continue forever. So it is vital the business owners act now on their exit plans.
If you are interested in learning if buyers will pay a premium for your business, you should contact us for an invitation to attend a complimentary Generational exit planning meeting. To learn more, call us at 972-232-1121, or visit our website and provide us with your contact info, or find a meeting near you.
And special thanks to BDO for conducting such a thorough and thought-provoking CFO survey!
Note: As mentioned, this survey was conducted before the fear of a coronavirus pandemic was raised. However, the underlying desire to find talent does not change and acquisitions are a good way to address this need.
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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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 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 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
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
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
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.
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
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 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
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
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
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 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 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.
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.
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
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
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 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
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.
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
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.
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
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 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
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
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
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