It is always reassuring to find third-party evidence that supports the trends we see daily in our M&A practice. As we have discussed in past posts, we are currently in the midst of one of the strongest seller’s markets in decades.
Now, based on new research from Merrill Data Source, we can anticipate several more months of increased buyer demand. According to Merrill:
In the “Americas” pre-completion M&A activity continues its 1Q surge, with particularly strong growth in the business services and consumer sectors. All regions and nearly all sectors remain a “go,” with a global uptick of 15%+ from the first four months of 2017.
This data is from their June “Merrill Insights,” which is based on the activity they are seeing in their VDRs (virtual data rooms). Merrill Data Source provides confidential “rooms” where due diligence documents are stored/analyzed/reviewed prior to a transaction closing.
As one of the leading VDRs for M&A transactions, their data provides us with a unique preview of deals closing six to nine months down the road, as VDRs are only opened when two parties are seriously considering a transaction.
So, if they are tracking a 15% increase in VDR activity through the first few months of 2018, it is a safe bet to assume that this will translate into a similar increase in deal closings in this M&A seller’s market for the remainder of 2018.
This is not a perfect science, and certainly VDRs are opened all the time for deals that do not close, as many transactions do not progress beyond due diligence (this is why VDRs are created).
However, based on past history, it is clear that a 15% “uptick” in global M&A activity (and by the way it is +16% in the “Americas” region that includes North, South, and Central America) would lead us to believe that the current seller’s market is not slowing down quite yet.
For one simple reason: If you are the owner of a privately held company, you are facing a market unlike any we have seen for at least a decade, if not longer. Sitting on the sidelines attempting to “time the market” to sell your business at its peak is no longer a viable option.
The day we know that a seller’s market has passed is when we are about six months into a buyer’s market. You don’t want to wait until that point to act.
Let’s face it: Most entrepreneurs don’t want to discuss their eventual exit until it is required of them. Keep in mind that based on our experience there are two kinds of business owners:
Based on surveys we regularly conduct with business owners, the number one reason that they don’t plan in advance is a lack of knowledge of how to exit their business in an optimal manner – one that maximizes their ROI, not only financially, but also in the intangibles of sweat equity poured into the company for decades.
We hold no-obligation, highly educational exit planning conferences throughout North America that are designed in a few short hours to take a business owner with no knowledge on exit planning to a point where he/she is prepared to start the process.
Frankly, it is in our name: Generational Equity. We are convinced that over the next decade, we will see the most significant transfer of wealth in the history of the U.S. economy as baby boomer business owners begin to retire in droves.
Sadly, far too few will be prepared for this event and many will sell their business at a significant discount or simply close the doors of their company altogether because they have not taken the time to PLAN for their exit.
Take the first step: Attend a Generational Equity conference near you. While there you will not only learn a significant amount about how and when to sell a business for maximum value, you will also be able to meet one-on-one with our M&A professionals leading the meeting.
You will have the opportunity to share your specific transition plans with them and learn how Generational Equity might serve your needs. To learn more, use the following links:
No matter what, please take time to consider your future plans prudently and thoughtfully. If you own a business, think about the legacy you want to leave behind not only for your family, but also for your employees, customers, and community.
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2021 Generational Equity, LLC. All Rights Reserved.
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
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
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).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
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.
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
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 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
We thank you Eric and Generational Equity making our dream come true.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
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
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 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 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
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
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.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
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 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
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
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.
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
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
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