Inkling to Exit Your Business? Part 1 / by Kerri
RBS Citizens and Forbes Insights recently produced a new survey entitled Middle Market M&A Outlook 2012. http://images.forbes.com/forbesinsights/StudyPDFs/RBSC_MiddleMarket_M&A2012.pdf . They surveyed the buyer market for M&A (Mergers & Acquisitions) activity.
If you are the CEO of a growing business with even an inkling to exit your business in the near future, take note of these findings.
Their insights and commentary are equally useful to exiting CEOs as prospective sellers into this market.
Combining a survey of 432 senior executives with 11 in-depth interviews from companies that ranged from $5-500M in size (45% under $25m); they found that: “most mid-size companies said they had ample cash, while two-thirds viewed today’s conditions as a “buyer’s market.” To this, add the fact that asset prices are at or near historical lows.”
Consider each of these Key Findings and how they apply to your situation:
Key signals indicate that markets could be ripe for M&A. Two out of three middle market executives view conditions today as a buyer’s market. Meanwhile, two-thirds of the survey respondents also said that balance sheet cash was plentiful—with over a third indicating that they could acquire assets of $2 million or more without incurring debt or injecting equity.
Other signals are mixed. Deal volume is often driven by market participants (aka buyers)’ view of future asset values. Only about a third of executives said they believed prices would be higher one year later. However, among the most active acquirers in the survey sample, that expectation rose to one-half.
For now, organic growth is the preferred path. More of today’s mid-size companies are focusing on achieving growth through wholly internal means than by any of the corporate development approaches involving mergers, acquisitions, partnerships, or other close collaboration with external counter-parties.
But companies are very much open to M&A. M&A is recognized as a source of potentially significant growth. Half of all executives described themselves as active in M&A, with one out of eight describing themselves as very active.