According to Thomson Reuters, U.S. GDP (gross domestic product) should experience another year of growth in 2018. In fact, analysts are predicting GDP growth of around 2.2% this year. You can find this prediction, as well a flurry of others, in their annual study:
As with all analysis of U.S. GDP, the proof will be at the end of the year. But based on what we are seeing so far, 2018 should be another year of economic expansion.
But what does this mean to you - the owner of a business - today? Well hopefully, it means that your industry and end markets will likewise experience growth.
Most importantly, it also means that buyers of businesses will most likely continue to be very active this year. Keep in mind that buyers buy when they have confidence in the economy. So, recessions are usually bad for buyer activity.
The really interesting thing that we are seeing is that all of the factors that influence seller’s markets are in convergence right now:
But sadly, as with most things, seller’s markets don’t last forever. History is littered with deals that were never completed before the recessions of 2000 and 2009 reared their ugly heads. Some of those companies that waited too long are no longer with us. If they are, many are just now recovering to where they were in 2008 in terms of revenue and profits.
One common trait entrepreneurs nearly all have is unbridled optimism. And really short memories.
If you are the owner of a business today, you really need to consider how much longer you want to wait out this M&A seller’s market. This is especially true if you are a baby boomer.
According to some estimates, nearly 60% of the 15 million privately held businesses in the U.S. are owned by a person born before 1964. That means that over the next 10-15 years or so, around 9 million of these folks will either need to find a buyer, pass the business on, or close the doors.
The ones that take the latter two options will be hurt the most; those that take the first, by planning for and creating an effective exit strategy, will reap the greatest rewards.
Be sure that you and your family are prepared for your exit by attending a Generational Equity exit planning conference. Investing a few hours of your time at one of our meetings could be the best thing you have done in years.
To learn more about who we are and our conferences, please use these links:
And remember this: If you don’t know where you’re going, any road will get you there. But where is the “there” that you want? Don’t end up regretting your exit!
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2018 Generational Equity, LLC. All Rights Reserved.
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