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How Long Will The Seller’s M&A Market Last?

By Generational Equity

02/05/2018

How long will the current seller’s M&A market last? This is the real dilemma facing every business owner right now, especially if they are in the process of, or considering, selling a company. Interestingly, a recent article in The Denver Post offers an answer:

Most likely 2018 and 2019 will be the last two years.

This is how The Denver Post described the situation:

According to some economists and financial research firms, 2019 and 2020 will reveal a decline in M&A activity in both the number of transactions and the value of the transactions.

Some economists are predicting a downturn or a mild recession as early as 2019 – more likely in 2020–2021. Therefore, 2018 through 2019 are the years businesses will be looking to maximize their deal structures and values in their exit strategies.

This is vital information if you own a privately held company today. Seller’s markets in M&A do not last forever unfortunately. Most are closely tied to several key variables, all of which are very positive right now:

  • Economic growth
  • Stock market expansion
  • Interest rates being at historic lows (but not for long)
  • Tax reform freeing up cash for acquisitions
  • Excess dry powder with equity firms for investing in privately held businesses

Again, according to The Denver Post:

So what does this mean for lower middle market and small-business owners? According to the 13th Annual M&A Outlook Survey released from the law firm Dykema, respondents were bullish on the prospects of a strong M&A market.

For example, over 70 percent of the respondents predict that the volume of small deals (under $50 million) will increase over the next 12 months. 68 percent of respondents said they would be involved in an acquisition in the next 12 months.

An astonishing 80 percent of respondents expect an increase in M&A activity involving privately owned business in the next 12 months.

As we have discussed in past articles, for business owners that take advantage of the current seller’s market in M&A, and begin the process of creating an exit strategy, this is GREAT news!

But realistically, based on the fact that it takes 9-14 months to close a transaction with an optimal buyer (the kind of transaction every business owner should strive for), you should start today learning as much as you can about how and when to sell a business for maximum value.

Take Advantage of this Seller’s Market with Generational Equity

A great place to learn as much as you can (without getting an MBA in finance) is to attend a Generational Equity exit planning conference. These are highly educational and designed by entrepreneurs for entrepreneurs.

In fact, most of our conference leaders are ex-business owners who found buyers for their companies, and were able to sell a business for the optimal value, using a professional process like we demonstrate in our conferences.

Since 2018 and 2019 are lining up to be potentially the last two years of the current M&A seller’s market, you should really consider getting your exit planning process started ASAP.

Fortunately, we hold our M&A conferences in locations throughout North America on a regular basis and would love to have you attend one in your area. To find a pending conference near you, use this link:

Do you have any questions at all about this seller’s market and what you need to do to take full advantage of it, or how mergers and acquisitions services can help you unlock hidden potential in your business? Please call us at 972-232-1121 or fill out a contact form and we will contact you.

I cannot stress heavily enough how vital it is that you don’t delay your exit planning. History is littered with hundreds of deals that were never completed and businesses that are no longer with us, because sellers waited too long to act in 2000 and 2008, right before two major recessions hit.

Reap the benefits of this seller’s market by starting your exit strategy today!

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

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