By Generational EquityDec 14, 2017, 04:00 et
A record high stock market, continued low interest rates and trillions of dollars in available capital will make 2018 an ideal time to sell a business, according to the professionals with Generational Equity, an industry-leading M&A firm for mid-market businesses.
"The stars are definitely aligning for a robust seller's market in 2018," said Terry Johnson, Chief Revenue and Strategy Officer for Generational Equity. "Business owners that recognize this, and are wise enough to hire a professional M&A firm, will reap significant dividends."
Record Stock Prices: Both the Dow Jones and NASDAQ are at record highs, which facilitates funding for publicly traded companies to expand through acquisitions.
"Acquisitions are often the fastest and most cost-effective way for public companies to grow to meet shareholder expectations," says Johnson. "A rising stock market provides a wave of capital to fund deals."
Low Interest Rates: Despite recent Fed increases, interest rates remain relatively low. The lower the rates the easier it is to finance a deal. Even though the new incoming Fed Chairman, Jerome Powell, has indicated he will continue the policy of slowly raising rates in 2018, compared to the long-term history of rate hikes, interest rates will still remain at historic lows.
Dry Powder: According to Bloomberg, equity firms are "sitting on a record $963.3 billion of dry powder," committed capital that they've raised but have yet to invest. "Buyers are looking for well-run businesses where they can profitably invest these funds," Johnson says. He added, "PE funds typically have a limited time frame for investing. Because of this, we anticipate a serious uptick in acquisition activity from these groups."
"Savvy business owners will consider these three factors when making the decision on the timing of their exit strategy," says Johnson.
"The sad reality is that some sellers wait until death, illness or a myriad of other negative circumstances force a sale at a substantial discount," says Johnson. "The right time to sell is when the market tells you it is time. Business owners that recognize this, and take action, will be rewarded."
Generational Equity, DealForce, and Generational Capital Markets, member FINRA/SIPC, are part of the Generational Group, which is headquartered in Dallas and is one of the leading M&A advisory firms in North America.
With over 200 professionals located throughout North America, the companies help business owners release the wealth of their business by providing merger, acquisition and strategic growth advisory services. Their four-step approach features exit planning education, business valuation, value enhancement strategies, and M&A transactional services.
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