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PE Firm Activity

By Generational Equity

08/31/2020

I think the opening sentences of a recent article in MiddleMarket.com summed up our current M&A environment quite well:

Judging by recent M&A trends during the Covid-19 pandemic, it’s increasingly clear that private equity investors have continued to focus on add-on acquisitions as a growth strategy even more so than they did pre-outbreak.

Add-on acquisitions, or transactions that occur when a company acquires another company that complements the acquiring company’s business model, accounted for a record 72.5% of all U.S. private equity buyouts in the first quarter of 2020, up from 2019’s record of 68.1%.

I thought I would share the article with our readers since most of you are owners of privately held companies and need to be aware of current M&A trends. Entitled “5 Tips for Private Equity Firms Eyeing Add-On Deals in the Pandemic”, it was quite insightful regarding how aggressive PE firms are right now in seeking add-on acquisitions despite (or in spite) of our current economic turmoil.

Why?

Because these very savvy investors always are thinking long term. For a standard PE firm, the typical investment horizon is 5-7 years. For others, such as family offices, there may not even be a terminus date picked for a platform company and its add-ons.

So, these professional buyers (the kind of buyers you want to attract) are active because they know the future will be here tomorrow, before we know it, and when it comes, they will be ready to reap the rewards.

You need to view your business the same way: As an investment, NOT a job. Far too many business owners that we meet at our growth and exit planning meetings do NOT realize that the investments they have made in their businesses should provide them with a return on their investment (ROI). This is how professional buyers approach all their potential acquisitions.

You need to as well. Key questions you need to consider include:

Do you have an exit strategy in place?
Have you worked with your wealth manager to determine what ROI you need from your business?
Do you have documented tactical and strategic growth plans in place for the business to reach your financial goals?

If the answer to any of these is “I am not sure”, then you need to attend a Generational executive conference. If you have already attended one, and you are still unsure of your answers, you definitely need to attend another meeting, or reach out to us to get your plan started.

We have successfully helped over 1,000 business owners exit their businesses for maximum value, and countless thousands of others who have attended our complimentary conferences and successfully exited on their own. Either way the time is now to start on your exit journey whether your exit point is 6 months from now, 6 years from now or even longer.

Our team stands ready to work with you as your partner to guide your growth and development so that you too can reach your financial dreams.

To learn more about what we can do to connect you with professional buyers like PE firms, please use the following links:

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

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PE Firm Activity