As we launch into 2020, savvy business owners are taking the time to review their recent performance and evaluate whether or not their existing strategies will serve them in the year ahead. For many business owners, this assessment will result in changes to current plans and prompt them to expedite the timing of their exit strategies.
The State of the M&A Market
Geopolitical risks contributed to a slowdown in global mergers and acquisition (M&A) activity during the first half of 2019. In the second quarter, European transactions fell 54 percent from the year prior, while deal-making in Asia dropped 49 percent. In the U.S., however, accommodative monetary policy, relaxed regulations and high levels of liquidity have helped to buoy activity in North American domestic deals, down just 3 percent from the same period in the prior year.
The U.S. is in the 11th year of its longest economic expansion, raising concerns about how much longer growth can continue. In the current environment of geopolitical uncertainty, predicting the future is not without challenges.
Private equity (PE) firms looking to reap the rewards of their investment returns may start looking for the exits and cash out of their positions. At the same time, historically low interest rates and high levels of corporate cash reserves make now an ideal time for strategic and PE buy-side transactions.
Business owners seeking to maximize the value of their entities should take the time now to engage experienced financial and corporate advisors to assess their companies and their existing exit strategies to determine how those plans will play out given signs that the economy may be slowing. Doing so will help to ensure that owners are properly prepared and nimble enough to execute on a potential sale or merger sooner rather than later. This is especially important in the current environment, for which deal multiples remain at all-time highs, but there is a lack of attractive assets to meet the strong demand from both strategic and private equity buyers.
The professionals with BayBridge Capital Advisors have deep experience helping domestic and international businesses develop and manage succession plans, exit strategies and other liquidity events, including raising capital, exploring M&A opportunities, conducting financial due diligence, negotiating contracts, preparing companies for sale and identifying potential buyers, sellers and acquisition targets.
About the Author: Judd Appel, ABV, is a director with BayBridge Capital Advisors, an affiliate of Berkowitz Pollack Brant that helps businesses raise capital, explore strategic partnerships and improve financial performance. He can be reached at the firm’s Miami office at 305-960-8858 or firstname.lastname@example.org.