Recently Pitchbook, a leading research company that delivers data, research and technology covering the private capital markets, including venture capital, private equity and M&A transactions, released their M&A update for 2019.
After a banner 2018, North American M&A activity has remained fervent through 1H 2019. Stellar first-half performances by major public indices fueled animal spirits while a recovery in lending markets has kept M&A financing costs at bay. PE continues to drive the prolonged M&A spell. Thanks to historical outperformance in private markets and successful fundraising efforts, PE firms now sit on a war chest of capital approaching $1 trillion.
Historic and YTD M&A activity can be seen in the chart below:
As you can see, since a good majority of M&A transactions close in the latter half of each year, and a solid portion of those in the 4th quarter, 2019 has a chance of equaling the record year we witnessed in 2018.
As an aside, the shocking thing about this chart is that through June of this year, we actually have already surpassed the entire deal value generated in 2009 during the Great Recession!
According to Pitchbook, in addition to the PE firms with a war chest of $1 trillion:
Many corporate executives are worried about a coming economic downturn and are positioning their companies to weather the storm, turning to M&A to shore up proﬁt margins and compete more effectively.
We are seeing the same trends in our own deals across 2019 as well. In fact, through the beginning of September, the total value of the deals we have supported is 30% ahead of what we achieved last year, and that was a record year for our firm. So we agree with Pitchbook and expect 2019 to finish very strong indeed.
Key Fact: Buyers Love Smaller Companies!
Another interesting fact that we have seen in further research is that the vast majority of deals closed are not mega-deals:
Nearly 70% of all transactions last year, and over 60% so far this year were valued below $100 million. And if you break the data down, a substantial portion of these deals under $100 million actually are worth under $25 million.
All of this continues to be great news if you are the owner of a privately held company in North America today. Quite simply, we continue to operate in one of the strongest seller’s markets in ages and do not anticipate that changing any time soon. However, since it takes 9-18 months to close most transactions, getting started on the process sooner is better than waiting until circumstances force you to exit.
If you would like to learn more about the current seller’s market and how you can take advantage of it, you should set aside some time to attend one of our exit planning conferences that we hold regularly throughout North America. Our complimentary, highly educational meetings may prove to be the most important you will ever attend in your professional life. To find a conference near you, use this link:
Don’t just take our word for it – here is what several of our attendees have said about the benefits of attending:
Most importantly though, as you look at current M&A market trends, be sure to also take stock of your personal journey and where you want to be in 5 years or so. Attending a conference does not obligate you to become a client. In fact, most who attend do not. However, the knowledge you stand to gain on this vital topic is priceless.
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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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
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Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
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
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
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).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
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
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.
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.
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
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
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
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
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 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
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
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
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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