We have returned with more M&A projections and predictions for 2017, and like all the others we have seen so far, the majority expect the seller’s market to continue for at least the next 12-18 months. This is the analysis of 2017 trends by Mergers and Acquisitions magazine:
Some of the obstacles to closing deals that persisted in the beginning of the year (in 2016), such as financing challenges, have eroded. Fueling confidence, the U.S. gross domestic product grew 2.9 percent in the third quarter, according to the U.S. Department of Commerce.
Expectations that the momentum will continue, especially since the presidential elections are completed. On Mergers & Acquisitions’ M&A Conditions Index (MACI), leads for new transactions and completed deals delivered their highest scores of the year late last year, heralding a strong fourth quarter. And survey respondents say that, barring a major catastrophe, 2017 will be a strong one for M&A.
As we have discussed in past articles, only you can take action to partake in this current seller’s market. Just because M&A activity is expected to remain strong in 2017, this won’t benefit you if you are not already taking steps to take advantage of this cycle. Many of you are not personally ready for either a partial or full exit. We fully understand that. However, what may surprise you is that it may take several years to prep your company to be ready for your transition. Even if you are not going to take advantage of this seller’s market and plan on waiting the 5-7 years until the next, your preparation to do so should start today.
Business owners are often surprised to hear this when they attend our exit planning conferences that we hold throughout North America. Many don’t realize that you can grow a business and create a successful company, but in a manner that does not positively impact the key issue that buyers nearly all aim to minimize: RISK.
For example, growing your largest client from $1 million of revenue to $5 million is a wonderful idea. However, if in doing so, their share of your revenue goes from 10% to 50%, you will have grown both your top line AND the level of risk associated with your company to any buyer.
Likewise, if you grow as outlined in this example, and your net profit margin declines from 10% to 5%, you will be raising red flags for many buyers who might look at your opportunity. Some sellers might say, “But the client who is now half of my revenue stream is a Fortune 500 company, they always pay early and have promised to keep purchasing product from us for years and years, based largely on my personal relationship with the buyer there.” Again red risk flags will go up!
The reality is you not only need to expand your business, but you also need to do it strategically, thoughtfully, and using methods that reduce the risk associated with your business to buyers.
This is just one example; there are literally dozens of key metrics that we analyze when creating our Roadmap for Enhancing Value for each of our clients. This document and analysis are key parts of the services we offer to business owners who sign up with us. And trust me, the sooner you get started on implementing the strategies and concepts we develop through our full evaluation on your business, the better off you will be. Our “hold and grow” program is designed to help business owners take a company worth X and over time (and with some effort) make it worth 2X or more.
To learn more, attend one of our informative, educational M&A conferences. While there you will have an opportunity to meet one on one with our professionals and discuss your situation in detail, and using the information you gather, begin to create your own exit plan.
To learn more, contact us via our website or call us at 877-213-1792.
Bu Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2017 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 2 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.