Corona Virus Versus the Mergers & Acquisitions Industry
Takeaway: Historically speaking, strong business performance has always paved the way for market upswings.
The coronavirus pandemic-epidemic-mass-pandemonium-zombie-apocalypse may have you thinking – “Should I still try to sell my business during these uncertain market times.”
The short answer – YES!
If you have a sellable business, odds are you have made it through a fair share of market downturns. If you business is over ten years old, then you have made it through multiple.
If you have grown your business, despite market downturns, then you have an even more sellable business!
Selling your business is a process, not an event. Sometimes the amount of time you can spend on the market can be from as little as six months, to more than three years. So getting started sooner, rather than later, is in your benefit.
Historically, the condition of the private equity market has been somewhat shielded from stock markets. As much of the American acquisition economy thrives upon the availability of debt to leverage acquisitions, and banks make most of their money by lending money.
In the past five years, the M&A industry has seen a large increase in the availability of capital to acquire businesses, which has created a buyers market – much like the real estate industry.
Coupled with historically low interest rates, the mix is just right for small to middle market business acquistions.
With so many businesses poised for acquisition, there has never been a better time to list your business for sale with a qualified M&A Advisor who can position your business to get noticed by the most qualified investors and business buyers.
Meaning – the more your business stands out, and stays on the market – the higher the chances you have of selling. Especially if you have a sellable, high-earning business.
Regardless of mass hysteria related to the coronavirus.
In fact – Neil Torpey (Partner at Paul Hastings ) Recently stated in The Middle Market’s Article on the state of the M&A world:
What is the impact of the coronavirus on middle-market deals and private equity-backed portfolio companies?
“There was a momentary pause in activity when travel restrictions were announced and certain transportation industry players curtailed their China-related activities, but the markets snapped back into shape fairly quickly as it has begun to appear likely that the issues relating to the coronavirus outbreak, while serious, will be manageable and (as with SARS) the situation will stabilize over the coming weeks as Spring and warmer weather approaches. I don’t expect there to be any material long-term negative impact on the markets or deal activity as a result of this outbreak.”
-“Nothing has changed as far as funding from the banks as acquisition loans are available for investors, this can change in the future but investors still have access to capital.” –Kyle Griffith recapping the most recent discussion from the M&A Roundtable
“The U.S. economy is one of the main drivers of M&A. Because the economy remains strong, M&A is expected to weather the volatility.” Ted Swimmer, head of corporate finance and capital markets at Citizens Bank, said he sees no long-term damage from the selloff. “It’s still business as usual…The U.S. economy still feels in decent shape,” he said.
Don’t let market uncertainty keep you from making one of the most important decisions in your professional career as a business owner.
Selling your business can be one of the most rewarding, profitable, and life changing events you can ever experience.
IAG is one of the top M&A Advisor Agencies in the United States – and we’ve already sold nearly a dozen businesses in 2020. In fact, we are on pace for a record year!
To help ease any concern you may have in meeting with one of our advisors, please feel free to request a virtual meeting, and we are happy to oblige whenever works best for you.
The point of all of this is:
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