On an annual basis, Ernst & Young (EY) does a survey of planned M&A activity for corporations, equity firms, and other buyers to determine what the ensuing 12 months may look like. As expected, 2018 is predicted to be a continuation of what is a seller’s market that we have been experiencing in M&A in recent years.
Looking ahead, a positive economic outlook, low borrowing costs and an abundance of “dry powder” waiting for deployment by private equity firms are all factors that should support continued deal-making in 2018, according to a survey by EY of senior executives from across the globe.
The firm’s poll showed 56 percent of respondents expect their company will actively pursue deals during the next 12 months. That is in line with prior results from the previous two years.
Note the adverb used prior to “pursue” to describe deal-making plans for 2018: ACTIVELY!
Business buyers that we talk to regularly are of the same mindset; many are planning to aggressively pursue transactions this year for many of the reasons outlined above. In addition, new tax legislation passed late last year will generate substantial cash for buyers to use for a variety of uses.
Presumably, mergers and acquisitions will be a key tactic allowing firms to obtain market share, gain new customers, get access to new technologies, and expand geographically, among a myriad of other purposes.
According to EY, another trend to lookout for in 2018 will be increased competition between buyer types. Here is their analysis:
Among the themes to watch: Corporate executives anticipate further competition in 2018 from private equity buyers for quality assets. “Private equity is likely to be one of the biggest stories in M&A over the next 12 months, with corporates being challenged for assets more than during the past five years,” EY said.
The firm’s survey found 60 percent of those polled expect more competition for assets, while half see private equity as the top challenger.
Bottom line: This is great news if you are the owner of a privately held company today. The next 12-18 months may be the best time in years to dust off (or create) your exit plans. Even if you are not sure exactly when you want to exit, or what the M&A process is, it is a great idea to find out what your business is worth now.
This will allow you to begin planning with your wealth advisor what time would be best for you to exit, based on how much you want/need to receive when you monetize your company via an M&A transaction of some type (either full or partial sale).
Keep in mind that selling a business to an optimal buyer is a process NOT an event. This means that getting started on your exit plans early is critical because it will allow you to build your business in a thoughtful, strategic manner, enhancing its valuation over time.
We highly recommend to business owners that they connect with an M&A advisory firm early so that by the time you want to exit, the company is prepared.
And since 2018 is going to be at least the fourth year of the current seller’s market, and these don’t last forever, it is a prime time to begin your exit process!
If you would like to learn more, contact our team at Generational Equity. We have been one of the leading lower middle market M&A firms for the past decade-plus. Our services are 100% focused on helping owners of privately held businesses exit their companies for the maximum value possible.
We spend time preparing our clients for a successful exit, not just the company itself, but also the owners and spouses/families. So, when the 11th hour of negotiations comes, all parties understand what the M&A process is.
And special thanks to EY for surveying the landscape and Merrill Corporation for reporting it to us.
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2018 Generational Equity, LLC. All Rights Reserved.
The information we learn from customers helps us personalize and continually improve your experience at gencm.com. Here are the types of information we gather.
Information You Give Us: We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice. Our computer system protects personal information using advanced firewall technology.
Information from Other Sources: For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Capital Markets LLC may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Capital Markets, L.L.C. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Capital Markets LLC at is office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
INFORMATION ON THIS WEB SITE IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES, SO THE ABOVE EXCLUSION MAY NOT APPLY TO YOU.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Capital Markets may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Capital Markets does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Capital Markets will be deemed NOT to be confidential. By sending Generational Capital Markets any information or material, you grant Generational Capital Markets an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Capital Markets is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Information Generational Capital Markets publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Capital Markets intends to announce such products, programs or services in your country. Consult a Generational Capital Markets representative for information regarding the products, programs and services which may be available to you.
Generational Capital Markets makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Capital Markets web site, please understand that it is independent from Generational Capital Markets, and that Generational Capital Markets has no control over the content on that web site. In addition, a link to a non-Generational Capital Markets web site does not mean that Generational Capital Markets endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Capital Markets BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Capital Markets.
Honored to win Investment Banking Firm of the Year 3 years running.
Over 50 awards and counting.
Sign up to receive regular email updates, industry-leading insights and details on complimentary M&A executive conferences in your area from our award-winning team
Success, you have been added to our list.