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Active Business Buyers Reap Rewards (And So Can Sellers)

By Generational Equity

06/29/2020

Sage and experienced dealmakers have always said the time to buy companies is when everyone else is not! Or, as Warren Buffett once famously said when asked about investment timing:

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful”

Now new studies just released verify this sage advice. In fact, business buyers that were active during the Great Recession of 2007-2009 earned a substantial ROI on their investments made during this time frame.

This is further evidence why owners of privately held companies need to aggressively consider their exit plans as the economy revives over the next few months. Middle market buyers will be (and are) active. However, you need to have wise counsel that helps you earn a maximum return when you do exit.

Data from the global financial crisis (GFC) of 2007-2009 “shows that companies that made significant acquisitions during an economic downturn outperform those that did not,” argues a recent article in the Harvard Business Review (HBR). While there are many differences between the GFC and today’s crisis, HBR notes that the GFC is “the best modern example” we can use to understand how the deal landscape might recover in the coming years.

Although this may sound contrarian to you based on recent economic events, it is clear that business owners with “buyer ready” companies will be better prepared to participate in a significant M&A upturn through the end of 2020 and into 2021.

However, there are several key questions you must consider: 

  • Is your business ready?

  • Are you ready?

  • Where are you in your personal exit journey?

  • Do you have a team of M&A professionals at your side to guide you as buyers become more aggressive?

How to Protect Yourself – Create a Plan/Hire a Team!

No matter what economic cycle we may find ourselves, these questions should be at the forefront of every business owners mind on a regular basis. Most business owners we meet with at our exit planning conferences agree that having an exit plan in place is critical, but the sad reality is that most do not have one and, worse yet, most have no idea of how to even begin creating one.

This is where Generational Equity can help. Our decades of combined growth strategy and exit planning experience has helped over 900 business owners exit their companies for maximum value. We have also helped countless others begin to prepare to one day do the same.

As we always say, successfully exiting a business is a journey, not an event. The sooner you prepare and begin the journey, the odds of exiting for maximum value increase dramatically.

Don’t just take my word for it, have a listen to what a few of our clients say about the journey we helped them take:

Want to learn how we can help you as well? Call us at 972-232-1121 or visit our website, provide us with your contact information, and we will be in touch.

And no matter what, please take the time to think about how you can take advantage of the next exit planning wave that is sure to come. Having experienced M&A guides at your side will become even more critical as we come out of this economic cycle because buyers will be looking for bargains – you will need help to ensure that your transaction is good for you, not their ROI!

Carl Doerksen is the Director of Corporate Development at Generational Equity.

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