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- Common Challenges to Selling a Business: Business Owner Insights (1/25/24)
- Considering Selling Your Business in 2024? (12/13/23)
- 12 Ideas to Attract and Keep Employees (11/13/23)
- Hope is Not a Strategy…and Private Equity Isn’t Your Escape Route (10/11/23)
- How to Successfully Sell Your Business to an Employee (9/25/23)
Reflections and Predictions
Happy New Year! We thought it might be fun to take a look at what happened related to merger and acquisition transactions in 2015 and make a few predictions as to what you might expect in the coming year.
2015 Reflections:
Buyers were optimistic about the health and viability of businesses and valuations reflected that. Financials improved among most sectors, with the exception of oil & gas, commercial printing, and mid-tier restaurants -- those didn't fare so well. One might think that buyers would be more cautious on the heels of the Great Recession, but that didn't appear to hamper activity.
There was plenty of growth in 2015, which put some businesses at risk of having a cash crunch. They got creative, though, and factoring (high cost debt) came into play. This could cause problems down the road if businesses can't fund their cash flow properly without relying on these expensive tools.
Speaking of debt, there was much more seller financing and bank financing in play last year than out of pocket cash. Low interest rates and willing lenders with SBA backing had a lot to do with it. We also saw some out of the box activity by Private Equity Groups (PEGs) where they were anywhere from unfunded (scary) to flush with cash needing a home. PEGs came way down into the lower middle market ($1 million+) to fill their needs.
2016 Predictions:
Election year = change. Until the outcome of the election is known (or reasonably assumed), financial buyers may be a little more cautious. Strategic buyers are typically less concerned because they're looking farther on the horizon and they're sitting on a ton of cash.
Speaking of cash, if interest rates rise as predicted, activity could increase and buyers would be smart to lock in rates early. Inflation should remain relatively low this year.
Hot industries will likely be anything in the web-based mobile space as well as safety and security type services. Recurring and contract-based revenue will also be rewarded.
Overall, 2016 may not be as active as 2015, but it's still going to be a good year for both buyers and sellers. We'll see how well our crystal ball did this time next year.
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