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Time to Catch the Wave? Favorable Trends for M&A Deals Continue into 2019

By Generational Equity

03/25/2019

Recently Merrill Corporation released their “America’s Deal Drivers for 2019” report in conjunction with Mergermarket. These two leading M&A organizations have once again provided not only an overview of 2018 activity, but a sensible roadmap for the remainder of 2019. 

Based on their analysis of Mergermarket data:

“M&A deal value climbed higher in North America last year, as acquirers took advantage of strong balance sheets and ample access to financing to get deals done. Total M&A value in the region reached US$1.61trillion, representing a 13.5% increase.”

And so far in 2019, the pace of deal making in North America has picked up:

“There have been 504 deals valued at US$257.5 billion so far in 2019, up 15.4% from US$223.2 billion announced in the same period last year, according to Mergermarket data.”

These numbers are truly remarkable when you consider how strong 2018 finished. Normally a new year begins with a brief lull in deal making, as investment banks try to replenish their depleted inventory and acquirers digest the prior year’s acquisitions.  

But, as we have seen before, 2019 is starting off much stronger than anyone predicted. In fact, Bloomberg News recently released this data:

“Globally deal makers made a comeback in January, logging $275 billion of mergers and acquisitions to mark the best start to a year in almost two decades. The surge was led by North American deals, with $187 billion of transactions announced during the month — up 40 percent from 2018 — according to data compiled by Bloomberg. 

“M&A came back even though the markets felt choppy, and that shows how confident CEOs are,” said Susie Scher, co-head of the global financing group at Goldman Sachs Group Inc.”

Even though the economy continues to chug along nicely, and more importantly CEOs are positive about the future of their companies, there are some concerns highlighted by Merrill:

“Economic conditions in North America appear rosy on the surface, with unemployment and interest rates low and the economy growing at a steady pace. However, 54% of respondents in the Americas singled out the US-China trade war and tariffs as the business risk most likely to climb farther up due diligence checklists this year.

"But ultimately, market participants see upside even despite some concerns. For instance, 47% of our poll respondents said valuations have become more sensible over the last several months — providing much-needed relief to M&A buyers amid a period of frothy prices. With plenty of investment dollars waiting to be put to work, any slowing in activity may actually push some acquirers to redouble their efforts to source deals.”

This last point is vital: If you are the owner of a privately-held business today, you can expect to start receiving even more phone calls from potential buyers than ever before! This can be good or bad depending on the experience you have negotiating and closing the sale of your business. 

If you are like most business owners, you will sell one company over your entire career. The professional buyers you want to deal with (because they’ll pay top dollar) have a distinct advantage because they close several deals every year. 

How can you take advantage of the current seller’s market and receive maximum value for your company?  

By hiring an M&A advisory firm with proven experience and track record of success. Although there are several good investment banks/M&A advisors in North America, none can compare with the success that Generational Equity has experienced over the last past decade plus.  

Here are just a few of our honors:

How have we been so successful and achieved these wonderful accolades from our peers? Two reasons:

Both go hand-in-hand. What we do best is to evaluate and sell privately-held companies. And, we do this so well because of the significant experience of our team. 

The first step in our process is having business owners and their partners/spouses attend a complimentary Generational exit planning conference. While there you will have the opportunity to meet with a couple of our exit planning team members who will be able to confidentially determine if your business is a good fit for our services.  

If you are interested in learning more about our conferences and our services, please follow these links:

By Carl Doerksen, Director of Corporate Development at Generational Equity.

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