Case in Point – Should You Speed Up Your M&A Plans?

March 5, 2018

I lead a group of top notch trusted advisors (ProVisors) in the Inland Empire, and so I am immersed in what CPAs, attorneys, commercial real estate experts and other advisors see in the marketplace.  Last month, we had a fascinating and insightful presentation by Mark O’Keefe , Managing Director of Ambrose Advisors (a leading Independent Investment Bank) on the state of the M&A markets.

This presentation got me thinking about you. I see my job as providing trending topics, fresh ideas and contrarian advice as it makes sense.  And this is one of those times.  Typically speaking, every trusted advisor is singing from the same song sheet when it comes to preparing for the sale of a business: Don’t rush to sell because you miss out on a huge opportunity to increase the value of your business and sell at a much higher multiple.  

For example, one of my group members runs CEO groups, and his CEOs have a dramatically higher multiple than the average.  Thus, it is “excellent advice” typically.  However, we might be in a unique time frame where accelerating the sale could drive a higher exit value.     

As Mark said, interest rates are low, flexible terms and structures are available, and there is high competition among lenders; thus, it is a strong market for borrowers.  Additionally, U.S. stocks keep posting record highs, notching milestones not seen in more than 20 years.  And middle-market business owners are reporting strong growth and a favorable business outlook.  How long do you think this highly favorable situation might last?  And, last but not least, M&A activity has slowed down due to the political, economic and tax uncertainty.  

Might it be the opportune time to take the contrarian view and sell quickly to maximize value?  The strong market is pushing values UP which might outweigh a few percentage points of improvement in operating performance.  

If you are thinking about it anyway, perhaps it is worth-while taking a look….


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