Insights & Info

Insights > Survey Says: Middle Market CFOs Ready to Spend on M&A

Survey Says: Middle Market CFOs Ready to Spend on M&A

By Generational Equity

CFOs Ready to Spend

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:

  • Increasing labor costs (21%)
  • Shortage of skilled workers (18%)
  • Retaining talent (17%)
  • Training and development (17%)
  • Attracting talent (17%)
  • Navigating labor disputes (10%)

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.

Using M&A to Meet Talent Demands

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?

CFOs Turning to M&A

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.

© 2021 Generational Equity, LLC All Rights Reserved 

Make an informed decision

The best decisions in life are informed decisions. We release educational business insights like this every week. Subscribe to make sure you don’t miss the latest news, views and analysis.

Success

Success, you have been added to our list.

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 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.
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
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
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
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 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
We thank you Eric and Generational Equity making our dream come true.
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
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
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
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 must say that I have never worked with a more driven, competent and focused individual as Don Ho.
Jay Dinnison, Owner of Sharpe Mixers
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
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 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 would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.
Bil MacLeslie, CEO, ipHouse
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
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 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
Generational Equity’s assistance was invaluable in compiling and marketing our business.
Bil MacLeslie, CEO, ipHouse
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