Sensing that the M&A landscape has considerably improved, buyers are accelerating their efforts to effect the right acquisition(s). The most viable reasons for this outlook follow:
- More than 50% of the market (buyers and sellers) is open to or involved in a transaction (up from 34% in 2016)[1].
- Sellers anticipate the lowering of capital gains taxes.
- Commercial bank lending for deals is severely hamstrung by overreaching financial regulations. Buyers expect that more debt will be available to leverage deals, as bank regulations are eased.
- Business owners who experience fatigue are open to liquidity events.
- Valuations are the same or higher than 2016, urging sellers to get into the market.
- Organic growth has eluded many buyers, who are targeting bolt-on deals to augment current product lines or eliminate competition.
- Most executives surveyed have indicated they will use outside experts, especially for valuation, due diligence and investment banking, all part of the expertise of Mentor Securities and The Mentor Group.
[1] Middle Market M&A Outlook 2017, Citizens Commercial Banking