Time to dust off the crystal ball… It looks like 2017 will be a very active year in Mergers and Acquisitions. There are many reasons for this, here are just a few of the top reasons why the outlook is rosy for company owners looking for an exit in the lower middle market ($5MM to $100MM in revenue) and middle market ($100MM to $500MM).
- Sellers want to capitalize on historically high valuations - By all accounts it’s a sellers’ market and business owners want to take advantage before that changes. 53% of business owners and CEO’s are open to making a deal in 2017 (up from 34% in 2016) (1)
- Buyers are actively pursuing - Revenue growth is the number one reason why businesses are actively looking to make an acquisition in 2017. According to a recent survey, 73% of buyers have indicated that they are currently involved in or would consider acquiring a business to grow revenue. (up from 60% in 2016) (1)
- Buyers looking for smaller strategic bolt-on deals – 34% of mid-market companies will look to make smaller strategic acquisitions as a bolt-on to their business operations (up from 26% in 2015). (2)
- The window of opportunity is closing – Studies have indicated that M&A activity is cyclical and transaction volumes have followed a succession of high and low points (waves) for over a century. These waves range from a duration of 7 years to 20 years. The average is 11 years and it is believed the present wave started in 2009. If that is the case, we may be getting toward the end of the present wave. (3)
- Private Equity has record cash on hand - Private Equity Firms are sitting on a record $1.3 Trillion in un-invested capital. The expectation is that they will increase completed transactions globally in 2017.
(1) Citizens Commercial Banking, Middle Market M&A outlook 2017 report
(2) Deloitte- M&A trends report 2016
(3) CAIA association report 2015
Touchstone Advisors is a New England M&A firm that represents owners of privately held manufacturing, distribution and service businesses, generally $3 to $50 million in revenue.
For more information, please contact:
Steven Pappas, M&AMI
Senior Mergers and Acquisitions Advisor
Touchstone Advisors LLC
Office direct: 860-669-2246