Merrill Corporation, a leading resource supplier to the M&A community, recently published a study entitled, “2018 Corporate Development Outlook & Management Trends.” As you can imagine from the title, it focuses on information provided to them by professional buyers working for corporate strategics and the attention was on their M&A plans for 2018.
The data offered a detailed insight into how buyers are approaching their activity this year. As the majority of our readers are sellers of businesses, I share this in the hope that it informs your M&A strategy going forward with knowledge of what buyers are prioritizing.
One of the first questions professional buyers were asked in their survey was: “How are you going to be deploying your corporate development funds this year?” The overwhelming response (44%) said they would be investing in “inorganic growth” strategies.
For those of you not familiar with that term, it essentially means that they will be buying other companies in order to reach their growth goals rather than trying to grow the businesses from within.
This is a significant realization if you aim to sell a business in this year’s market. Corporate strategics are going to be very active and competing with private equity firms as never before to close deals. Again, great news if you are in the market.
A second compelling question they asked was: “When you hire an M&A advisor, what service is most important for them to provide you?”
Keep in mind that these are not rookie business buyers. Many of these folks are very experienced dealmakers for their companies, closing, in many cases, dozens of deals a year. But in most engagements, they do hire buy-side M&A advisory firms to guide them. (Note: Generational Equity is solely a "sell-side" advisory firm. We ONLY are hired by and work for sellers. This information is being provided for you so you can see that if professional buyers hire advisors, so should sellers).
So why do buyers hire them? A significant percentage of respondents (28%) said that the primary reason they hire buy-side advisors is for sourcing potential opportunities, a.k.a. helping them to find targets to buy.
This reason is why professional buyers we talk to regularly keep telling us the same thing: They simply do not see enough good targets to acquire!
They struggle with finding enough businesses to look at, and this is where Generational Equity can help you, the seller. We connect business owners with buyers who, in many cases, are now willing to pay a premium for well run, profitable, middle market companies.
The key point here: Generational Equity solely focuses as a sell-side M&A firm. We never take any payments from buyers; we only work for sellers. However, because buyers we work with know we are a great source of salable companies, they come to us in droves. In fact, we have over 34,000 registered buyers in our proprietary buyer database who have told us exactly what they are interested in seeing in their targets.
Two key reasons:
Both of these are equally important. Many business brokers do not require a commitment fee upfront to cover their initial costs. Subsequently, the seller can back away at any time and refuse any offer. Generational Equity’s approach helps buyers avoid wasting time on negotiations with sellers who aren’t committed to exiting.
Secondly, our clients have legitimate valuation ranges that we provide them so that when offers come in, they don’t ignore them based on value expectations that are founded on nothing but vapor.
These are two key points why business buyers like to work with us and reflect the reason why buyers also hire M&A advisors: They need professional guidance as well, especially in sourcing good sellers.
We appreciate Merrill giving us insight into the mindset of corporate buyers as we move through 2018. We hope that you have found this info enlightening as well. If so, and if you own a business and do not have an exit plan in place, we invite you to attend a Generational Equity exit planning conference soon.
Held throughout U.S. and Canada, these meetings provide business owners with incredible insights on how professional buyers think and operate. An investment of your time could pay off dramatically. Don’t just take my word for it, listen to what a few of our clients have told us about our conferences:
To find out how you can attend one of our meetings, please use the following links:
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2018 Generational Equity, LLC. All Rights Reserved.
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.
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 thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
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 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
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
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.
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 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 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
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
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
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
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 would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
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
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
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