As the dreary clouds of a post-recession ebb away, we’re starting to see the silver-lining turn to bright lights on the horizon. In short, there is a perfect storm that’s been a-brewing over the last year or so that’s beginning to trickle-down to the middle market. It’s what one in this industry might call a perfect storm. Here are some reasons why mergers and acquisitions in the middle market are heating up.
To recap, equity valuations are up in both the private and public markets. Debt funding is also flowing more freely thanks to the stronger financial positions across the board. All of the aforementioned factors are playing a role to create a real seller’s market for both private and public mergers and acquisitions.
But what does this mean for your business?
Fortunately, the planets have aligned in 2013 and 2014 to make for some killer times for getting deals done and riding off into the sunset. The question is, when will the cycle end? We know these things ebb and flow, but predicting when then next fall will strike is anyone’s guess. I’ve always been an advocate of not selling until it’s truly your time, but decisions should also be weighted for external macro factors as well. The time to prepare to sell a business is long before you actually intend on doing a deal. Such a strategy can help prepare you for when the perfect storm hits, allowing you to take advantage of the macro trends that could net you millions more in net proceeds just based on the timing of your deal. When the waves are right, that’s when you need to hit the surf. This perfect storm in M&A won’t last forever. Let’s just hope when you’re ready to finally jump-in that the flurry hasn’t completely died.