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TRADE SALE OR SALE TO EMPLOYEES (IN THE UK)?

Introduction

There has been significant growth in the number of Employee Ownership Trusts (EOTs) in recent years, and in this article I explore some of the differences between shareholders selling to a trade buyer and selling to a trust set up for this purpose.

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What Is The Denominator Effect?

When it comes to selling your business, and you are considering waiting or pausing, there are several factors to consider, such as market conditions and interest rates. But there is also something called the denominator effect.  

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The Public-To-Private Trend For New Paths To Growth

Many individuals at large institutions that trade in the public markets are turning to private ownership and pursuing majority equity positions in lower middle-market companies and even creating their own funds. This public-to-private trend is partially being driven by current and expected public market volatility over the next few years, combined with individual business circumstances, all with the expectation for a brighter future. The recent stock market instability is presenting attractive opportunities for companies that may perform better in the private market. Private equity and private investors have ample capital available to them at a time when public market valuations are sinking. The interest is coming from both private equity funds and strategies, as private markets are gaining ground on public markets. Take-privates are on pace for the second year in a row at $100 billion or more in deal value. That is a first for the industry in more than a decade.

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Why Competition Matters

How will running a competitive bid process help me?

The lower middle market remains very active, and we anticipate that this trend will continue for the foreseeable future. If you are a business owner, you have probably received unsolicited interest and perhaps even offers for your business. There is a lot of money chasing few deals, so buyers are looking to find off-market deals to build their pipeline and purchase a business below market value to boost their investors’ returns. Having additional buyers at the table tends only to benefit the seller.

When a buyer uncovers an off-market deal, they are often in a better position to buy the business at a discounted price than what they would pay in a formal auction or open bid process. Buyers seek acquisitions to help solve a problem or hit an ROI benchmark. If the buyer can purchase a business below market, then the buyer ends up winning both in the current transaction and future transactions. The business owner is the one who tends to have seller’s remorse. Our team commonly speaks with buyers who will not participate in auction processes because they do not want to pay top dollar, and those buyers know that they are not willing to do what it takes to win the bid.

If you have ever watched an episode of Shark Tank when all the sharks are bidding on an opportunity, you have seen how a competitive bid process can benefit the company pitching to the sharks. When Lori Greiner, Barbara Coroan, Robert Herjavec, Daymond John, Kevin O'Leary, or Mark Cuban share an interest in an opportunity, it often piques the interest of another shark who wants to jump in and try to win the bid. Sometimes, the sharks even go into the deal together. This process also happens for deals within the lower middle market. When two buyers go into a deal together, they are called co-investments. In this case, two can be better than one. However, you will not know if co-investments are an option until you go to market and run a process.

When a seller receives an offer from an unsolicited party, the offer only reflects one party’s view of the value of the business. Businesses are comprised of both tangible and intangible assets. That is, the value of the business lies not only in its tangible assets like machines and inventory but, perhaps more importantly, in the quality of its people, process, customer base, and intellectual property. Acquirers buy businesses for many reasons, including for geographic expansion, product line development, talent acquisition, and competitive advantages, to name a few. Why is a business worth 5x to one buyer but 7x to another? A business's real value is the opportunities an acquirer has post-closing. Ultimately, the only way to know if the offer in hand is a representation of the market or even the best option for the business owner is to explore multiple views of the value of the business.

Ready to explore your exit and growth options?

If you move forward with the one offer available, what will you do if the deal falls apart during due diligence? Due diligence can be a time-consuming and overwhelming process. If you go through the due diligence process and the deal is unsuccessful, what? You will not have a second or third option. The sale process can be very emotional. Often, when a deal closing is not successful, a firm that ran a bid process will typically have a handful of bidders that they are able to re-engage to work toward a successful closing. The deal team can utilize the initial data request and due diligence process to make the workload lighter the second time around. An experienced M&A deal team will be able to craft a strategy to target active buyers from previous efforts and bring them back to the table. However, if you only have one option, you must start over from the beginning. By the time you start over, you are at risk of missing the market, which might cost you tens of millions of dollars.

The other great aspect of running a bid process is that you have leverage during due diligence. Typically, when a letter of intent is signed, the negotiation power shifts from the seller to the buyer. If you have other suitors waiting in the background, an experienced M&A deal team can use that competitive tension to help a seller secure the best deal on the market and keep the buyer in check. The buyer who ultimately wins a formal auction process knows that there were other suitors competing for the bid.

It is crucial for any seller considering a sale to hire a capable sell-side M&A firm to take them to market. A dedicated sell-side team virtually assures you that you will have multiple suitors and bids. You will be able to see several different views on the value of your business and be able to determine the optimal deal structure. The process will allow you to explore other partnerships and understand what competitive advantage various firms can bring to the table. If you compare the company sale process to dating, it is good to know what other suitors offer so you can pick the best one for you! Having an experienced M&A team take you to market to uncover your best options will give you the peace of mind that you have the information you need to make the best decision for you and your business.

  Author
  Kendall Stafford
  Managing Partner
  Benchmark International

  T: +1 512 347 2000
  E: STAFFORD@BENCHMARKINTL.COM

 

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The Green Economy Update And Outlook

The global green industry is forecast to grow at a significant rate between 2022 and 2026. Over the past decade, the green economy’s market capitalization grew from $2 trillion in 2009 to more than $7 trillion in 2021. It also nearly doubled its share of the global investable market from 4% to more than 7%. Last year, the market grew at a steady rate and is expected to continue to do so with the growing adoption of strategies by key players.

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The Surge Of Cryptocurrency M&A

Deal activity continues to heat up in the cryptocurrency space as the adoption of crypto becomes more mainstream. Last year was a huge year for cryptocurrencies. In 2021, the price of bitcoin was up 49%, Ether was up 390%, and Dogecoin was up a whopping 1,600%. The M&A market for cryptocurrency soared by nearly 5,000% last year. But this is nothing compared to the activity for M&A of crypto companies.

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Types of Financial Buyers

There are two types of buyers: strategic buyers and financial buyers. Commercial lenders, family offices, private equity funds, mezzanine funds, independent investors, and other capital providers are all financial buyers. Strategic buyers include everything else. It can be beneficial to entertain both financial and strategic buyers when you are selling your business. Still, it is important to understand how financial buyers think and what you’re dealing with as you work through conversations and negotiations.

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Why Does Ebitda Get Adjusted?

In the world of small to mid-market mergers and acquisitions, a number that is very important is a company’s adjusted EBITDA. The adjusted EBITDA is meant to find a company’s true normalized earnings by taking away any outside influences or ownership influences on the company’s bottom line. Some companies do not have to make many adjustments in order to find adjusted EBITDA, while some companies may need many adjustments to arrive at adjusted EBITDA.

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Family Business Succession Planning And Success Rates

A family business is technically defined as an organization that is owned and operated by at least two members of the same family. Family businesses actually account for around two-thirds of all companies worldwide, and 90% of companies in the U.S. The largest 500 family-owned companies generate annual revenues of $6.5 trillion. Global research has also demonstrated that well-run family companies are more profitable and stay in business longer than other companies, even with the many challenges they face. 

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Major Investment And M&A In The Metaverse

What Is the Metaverse?

The metaverse is an immersive digital online environment that links social and commercial activities through technologies such as virtual reality and augmented reality to create 3D virtual spaces that mimic reality. Its use is quite broad and can be applied to gaming, work meetings, e-commerce, socializing, or entertainment. The term “metaverse,” which was first introduced in the 1992 novel Snow Crash, is today considered a way to truly redefine the Internet. It is a concept that is still being shaped, but the vision is rapidly evolving. There is not necessarily one single defined metaverse, as various companies are working to shape the idea in their own ways. For example, blockchain tech such as cryptocurrency and non-fungible tokens (NFTs) are being used to support digital transactions in the metaverse. Video game makers are shifting their online worlds to resemble social networks with a market opportunity to expand to include live entertainment such as concerts and sporting events. With this transformation comes a battle for the share of social media ad revenue. And as the metaverse continues to evolve, it continues to represent a huge business opportunity.

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Aerospace And Defense Sector M&A Update

The financial health of the aerospace and defense (A&D) industry has rebounded significantly from the negative economic COVID-19 impacts of 2020, poising the sector for a strong M&A market in 2022. The earnings of commercial aerospace firms have recovered, and original equipment manufacturers (OEMs) have announced a series of production rate increases for the years 2023 to 2025, raising the likelihood of supply chain acquisition activity in 2022. Additionally, the defense budgets of both the United States and Europe have remained stable, leading to high demand for defense products and services despite some production offsets due to supply chain challenges. 

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U.S. Small Business Confidence Drops Amid Inflation Concerns

Last month, small business sentiment in the U.S. fell to its lowest level in nearly 9-1/2 years due to concerns surrounding inflation. Yet, at the same time, demand for labor remains more substantial than expected as companies continue to pursue growth.

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2022 Sector Report: Esports Valued At Over A Billion Dollars

eSports is a form of video-game-based competition that has seen significant revenue and viewership growth in recent years. Much of the revenue is coming from advertising dollars from brands, such as ads shown during live streams on online platforms, video-on-demand content of matches, or on eSports TV. And competitive gaming is becoming more mainstream than ever. 

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What Are Environmental, Social, And Governance (ESG) Policies And B Corp Certification?

As a business owner, you may have noticed an increase in conversations regarding environmental, social, and governance (ESG) policies in the workplace and B Corp status. Even though these policies are being implemented more frequently with larger companies, many small and mid-size business owners are not fully aware of what these policies are, what they mean, and how they are affecting investor behavior and M&A transactions. Let’s start by breaking down exactly what ESG is. 

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What Are The Pros And Cons Of An IPO?

An IPO is an initial public offering (IPO), which is the first limited public stock sale by a private company. IPOs are a strategy often used by smaller businesses to raise capital from public investors in order to facilitate expansion and growth. Once public, the company can be traded on the open market. There are both upsides and downsides to taking a company public. 

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The M&A Process From A Buyer’s Perspective

When it comes to mergers and acquisitions, it is common for a seller to struggle to see the transaction from a buyer’s point of view. This is quite understandable because a business owner spends years, and even decades, building their company into a successful venture. It makes it more difficult to see the transaction from a potential buyer’s perspective. Many M&A transactions fall through because the seller and buyer simply cannot get on the same page. As a seller, you can work with an experienced M&A advisor to help you manage your expectations for the value of your company so that you can not only get the most out of your deal but also make sure the deal goes through. If you’re selling a business, you should understand how the valuation of a company works, what it is based on, and what is important to a buyer.

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2022 Digital Healthcare Industry Report

The global overall healthcare industry value is projected to reach $665.37 billion by 2028. Focusing on the global digital healthcare segment of the market, it was valued at $145.57 billion in 2021, and it is expected to reach $430.52 billion by 2028, growing at a compound annual growth rate (CAGR) of 16.9%.
 
The COVID-19 pandemic led to significant shifts in the healthcare sector, as there was an urgent need to adapt and embrace new ways of operating. Many of these changes ushered in the latest in digital healthcare technology and are here to stay. The digital health segment applies software, hardware, and other tech services to the healthcare sector. The space is comprised of categories such as: 
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Benchmark International Named Best Middle Market M&a Specialists

Benchmark International has been named the Best Middle Market M&A Specialists by Corporate Vision’s Corporate Excellence Awards.

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The Pros & Cons Of Buying An Established Franchise

The franchise business model can offer a great way to own your own business without the risks that are proven to come with start-ups. But owning an existing franchise can undoubtedly come with its share of challenges. So before jumping into a franchise ownership, be sure to consider all the good and bad that you could face before deciding if it’s the right opportunity for you. 
 
The Pros 
 
An existing franchise comes with a history that you can use to assess its financial data to know whether it is a good business. In addition, you can see all the books to make your determination of possible future performance. 
 
It can be easier to obtain financing for a business with an existing history of financial performance because lenders have something concrete to go by and, therefore, more confidence. 
 
You get to skip the time-consuming start-up phases of owning a business, such as creating a business plan, creating a product, doing market research and testing, and figuring out how to scale. With a franchise, this work has already been done for you. Next, you have to make sure it succeeds. 
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2022 Real Estate Industry Report

The COVID-19 pandemic impacted nearly every industry in some way, but real estate underwent its own very unique transformation. Many office buildings have sat empty and seem almost obsolete while most workplaces shifted to work-from-home models, and many plan to stay that way or create hybrid workforce plans. Throw in the global supply chain issues, labor shortages, and inflation, and there are certainly economic risks for the sector. But the economy has steadily been recovering while the most serious times of the pandemic appear to be subsiding. 
 
GDP in the United States has fully bounced back from the 2020 pandemic-induced recession. This is good news for the real estate sector’s recovery. Coupled with low interest rates, strong economic growth will be very encouraging for commercial real estate. GDP is expected to grow by a strong 4.6% in 2022. 
 
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The New Reality and What it Means for Valuation

Is the bull market for privately held companies over? No, that’s not (yet) the reality. But one of the hallmarks of the glorious decade for selling businesses is no more. And unfortunately, many of the acquirers’ gatekeepers weren’t around the last time there was a bull market that looked like this one.

So what is this new normal? Let’s first look at the old normal that we enjoyed from 2010 to 2019 - a nice, slow, smooth macroeconomic recovery. The normalcy of the “teens” allowed small and medium businesses to grow smoothly under ideal conditions. As a result, many businesses experienced near-constant year-over-year growth. And when they’ve failed to do so (or failed to do better), the reasons for the deviation could almost always legitimately be traced directly to some internal event; perhaps the loss of a key salesperson, the launch of a bad enhancement, the lack of ability to pass on an increase in inputs to the customer, or the inability to keep up with a specific competitor.

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How to Avoid Seller's Remorse

Selling your business can be an emotional experience. You certainly don’t want to be left at the end of the process with a sinking feeling that you have made a bad deal or sold to a buyer who doesn’t appreciate the value and legacy of the company you have built. However, there are things that you can do to avoid seller’s remorse; we will discuss several of them in this article for you to consider.


It’s best to begin putting together an exit plan sooner rather than later. Preparing well for the transition of a business requires time, action, and significant attention. For many business owners, their business represents the majority of their wealth. Planning for the transition allows you to have enough time to minimize taxes, prepare financially for a living situation without the income from the business and put a plan together for the next phase of life. Although typically, entrepreneurs are not the retiring type, knowing what your next move will be can be very important for your state of mind post-sale. Seller’s remorse can often be avoided by beginning to plan for the transaction three to five years before the business owner wants to exit.

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Questions to Ask Before Selling Your Company

What’s Your Competitive Advantage on the Market?

Consider why prospective buyers would be interested in purchasing your company. You should be able to identify its assets in order to get a proper business valuation. How unique is your product or service offering? Do you outperform the competitors in your sector or in a particular geographic area? You will also want to consider whether your revenues are stable, growing, or declining. If you understand why someone would be interested in purchasing your company, you will be more equipped to enhance those qualities and effectively articulate them to buyers.

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Dispelling Myths about Private Equity Buyers

We have all heard the horror stories from lower middle market business owners. Private Equity buyers will come in and get rid of all of my employees, borrow an absurd amount of money to finance the acquisition, thereby straining my company’s balance sheet and income statement, and then, light a match Goodfellas-style when they are done extracting value from it. But, I’ll let you in on a little secret? The days of financially engineering a path to outsized profits are long gone. While there certainly was an era where Private Equity funds looked to lock in a guaranteed “win” by over-levering the balance sheet, stripping the Income Statement of “fat”- read, people- and quickly flipping to monetize the win, those days are largely behind us. Today, most professional buyers value the team in place more so than any perceived competitive advantage with the product or service offering. I’ll say that again, buyers often view the team as the most important determinant of success- more so even than the core product or service offered by the business.

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Strategies for Retaining Talent During a Merger or Acquisition

Mergers and acquisitions are effective solutions for growing a company, getting a competitive edge, accessing new resources, lowering risk, tapping into new markets, and acquiring key talent. Obviously, these are all very appealing to investors and upper management. But employees do not always see it this way. 

In actuality, employees often view such a major change as a threat. These negative feelings can lead to employee retention problems, especially in today’s world where labor shortages are already a significant problem. Staff members may feel uncertain about the future of the company, how secure their job may be, how the culture will change, and how a change in leadership will impact them. They can also have their concerns worsened or blown out of proportion if there is not a clear line of communication about what is happening with the company during a transition. Sometimes employees will feel a sense of betrayal. Furthermore, some team members may feel guilty if they keep their jobs while coworkers are victims of downsizing or restructuring. Combine all these factors and quickly end up with people looking for work elsewhere. But that is not good for any deal. Why?

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What is The Outlook For Capital Markets in 2022?

Capital markets drive capital to areas of innovation and positive growth, creating jobs and fueling economies. In the US, capital markets fund 73% of all economic activity. This takes the form of equity and debt financing of non-financial companies. Capital markets facilitate debt issuance, which tends to be a less restrictive form of borrowing for businesses. The usage of debt capital is the most prevalent in the US (80%), versus other regions (only 20–30%) where bank lending is more prevalent. 

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Seller Protection With an Earnout

Earnout Agreements have become increasingly routine in deal structures over the last several years as they are most widely used during times of political and/or economic uncertainty. The earnout payment is additional compensation paid in the future to the seller after the business is sold. An earnout agreement can help bridge a valuation gap or encourage the former owner to remain for a longer period of time following the close of the sale. They should only be considered when the company will continue to operate the same in the years following the sale at the time of closing. While sellers can sometimes be nervous when it comes to agreeing to an earnout, there are protections for yourself that you can keep in mind.


When structuring the earnout, it is important to consider the financial metrics used and choose your benchmark carefully. For example, buyers will often prefer to use an EBITDA target as they believe this will be the most dependable indicator of the business's profitability. On the other hand, typically, sellers do not like using EBITDA due to concerns that the buyer can manipulate the number to benefit the buyer at the end of the earnout period. While sellers usually prefer a marker based on the business's gross revenues, gross profit can sometimes be used as a good compromise for both parties. Suppose an EBITDA calculation must be agreed to move forward with the deal. In that case, the seller can ask for various expenses, overhead costs, etc., to be excluded from the calculation.

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Mortgage Brokerage Industry Report

The Global Market

The onset of the COVID-19 pandemic rattled the worldwide mortgage market. New lending volumes plummeted to record lows amid declining consumer sentiment, job losses, and nationwide lockdowns in many countries. However, new mortgage lending has remained on an upward trajectory since the second half of 2020. The total number of closed-end mortgage originations jumped from 8.3 million in 2019 to 13.6 million in 2020. That’s an increase of 65.2%. Regulators have kept interest rates at an all-time low. Even though interest rates could begin to tick up at some point, globally, the mortgage brokerage services market is expected to continue to see tremendous growth through the year 2027.

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Why Should I Sell My Company?

As the owner of a business, you face a slew of tough decisions nearly every day. One question you may have asked yourself is whether you should sell your company. Several factors can influence your decision to sell, some of which you may not have even thought about. Here you will find a comprehensive list of possible reasons to help you decide if and when selling your business is right for you.  

It's at a High Point

Over time, most businesses face different cycles of highs and lows, and potential buyers prefer to acquire companies that are thriving and have a positive future outlook. When your company is performing well, and profits are high, you can opt to sell to get the maximum value in a sale. You may not be ready to retire or move on, but if you sell at the right time, you can make the most money possible and pave the way for a more secure financial future. This can also help you avoid selling at a later date for less value, which would mean less money for your retirement. 

If you are far from being ready to retire, there are ways to structure a deal to stay on with the company, working for the new owner and helping them grow the business. This can help you start the transition to your full exit. And in this case, if the business declines or an economic recession occurs, you do not face the risk of losing value because you got out at the right time.

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How a Partial Sale of Your Business Can Benefit You

There are strategies available for business owners who are in need of additional capital to grow their business. The partial sale transaction has gained popularity over the last couple of years. When business owners find themselves with limited operating liquidity, they are unable to create the type of growth they desire. A partial sale can bring additional resources into the business that can set into motion long-term growth strategies, increase operational stability and recruit new hires. If you are looking to downsize your company, you can invest that money into different opportunities that may offer you a higher return on your investment.

A partial sale of your business gives you the opportunity to remain involved in the business that you have spent decades building. Following a partial sale, many business owners serve as advisors, senior executives, board members, etc., to assist the buyer with their transition period to new ownership. Smart buyers are open to customizing the role and involvement of the seller once the deal has closed in order that the seller remains with the business for months and years to come.

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Financial Services Industry Report

Financial Planning & Advisory Sector

In 2022, the market size of the financial planning & advisory industry is $59.2 billion. It is expected to increase 4% this year. Between 2017 and 2022, the market has grown 4.5% per year on average. The size of the market has increased faster in the U.S. than the overall economy. 

Industry profit declined in 2020 due to declining assets under management and lower return on assets but increased in 2021 as the economy began to recover. As macroeconomic conditions continue to improve through 2026 gradually, industry operators are expected to benefit from rising equity values and rising interest rates. 

High competition is a challenge in the industry, while the population's median age represents an opportunity. This is because the rising median age of the U.S. population is approaching retirement age, which increases the demand for retirement planning, capital preservation, and estate planning.

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The Increasing Adoption Of Enterprise Resource Planning And Customer Relationship Management Software

Due to the COVID-19 pandemic, there has been increased adoption of enterprise resource planning (ERP), customer relationship management (CRM), and other entrepreneurial software. In 2020, many companies accelerated their plans to begin using these systems, and the market for them remains hot, particularly for Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) models. COVID forced most businesses to digitize their offerings in real-time as consumers began turning to online shopping and employees started working remotely—both trends that are expected to continue into the future.

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The Shift From a Seller's Market To a Buyer's Market When Interest Rates Rise

So if you are a business owner considering selling your company, the good news is that right now, it's a seller's M&A market. By October of 2021, total M&A deal activity reached $4.4 trillion, which is an increase of 92% compared to a year ago and is the strongest opening period for M&A since 1980. In addition, merger activity resulted in deals totaling $1.52 trillion in the three months prior to September 27, 2021. That's up 38% from the same quarter in 2020—and more than any other quarter on record.

In a seller's market, demand is high for assets that are in limited supply, giving sellers more pricing and negotiating power. This demand can be attributed to a recovering economy, high cash balances, big government spending, new SPAC buyers, and low-interest rates. Plus, investors are flush with cash and ready to spend it on acquisitions that can help create growth or add capabilities. When market conditions shift, buyers have the upper hand in deal negotiations. And this could happen when the U.S. Federal Reserve increases interest rates in the next year or so.

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What Does Inflation Mean For Your Ability to Sell Your Business?

Short answer – We don’t know. The M&A market has never interacted with this much inflation before. Inflation is now at a 40-year high. In 1982, there was no M&A market. The birth of the market is most often traced to KKR’s 1988 takeover of RJR Nabisco, as made famous in the 1989 book “Barbarians at the Gate” and the 1993 movie of the same name. Whether that is the actual date of birth or not can be argued. Still, at the time it was commonly thought that the cash for the $25 billion price tag was unattainable because, as the book says, there was a belief that there was not anywhere near that much excess cash floating around for doing deals in the entire world.

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The Impact of Labor Shortages on M&A

The Labor Shortage Persists

The COVID-19 pandemic has impacted companies of all sizes, but small businesses have certainly been hit the hardest. First, there were total shutdowns, followed by financing problems due to slowed business, and now it is labor shortages that are the latest issue as the world works towards recovery. 

The slew of workers leaving the workforce altogether is fueling a growing labor shortage in what seems to be every industry. Demand is up, and supply is down. Businesses are facing concerns with not having enough people to get the job done—especially in sectors such as healthcare and technology. These spaces are seeing attrition rates of 3.6% and 4.5% higher, respectively, than last year. Research even shows that 36% of workers who quit their jobs did so without another job lined up.

And the labor shortage is an issue that is happening on a global scale, from the US to Canada to Europe. According to the US Census Bureau, many businesses struggle to retain and attract employees, and 49% of business owners say the labor shortage is affecting their business. And a Canadian study reported that 30% of Canadian business owners say the top motivating factor for pursuing an acquisition is gaining access to new talent. That number is up from 20% before the pandemic. Additionally, a recent Eurostat survey found that, in the third quarter of 2021, a worker shortage was hampering production at 83% of industrial companies in Hungary, 50% in Poland, and 44% in the Czech Republic.

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No Recession in 2022, But 2023 May Be a Different Story

The good news is that experts agree that 2022 will be in the clear from a recession for the US economy. But the next few years may tell a different story. 

An economic downturn could arrive as early as 2023. Federal Reserve policy is expected to change, which will result in more business cycles that many companies will not be ready to face. Even if the country is lucky enough to dodge a recession in 2023, we can expect the economic decline to be more detrimental in 2024 or 2025. The Fed will eventually start easing up on stimulus initiatives and raising interest rates at the same time that inflation is on the rise. It usually takes the economy about a year to react to the Fed’s actions, putting us on track for a safe 2022, but with the following years feeling the impacts.

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2022 Is a Seller's Year for M&A

2021 Was a Record Year

In 2021, dealmakers worldwide announced $5.6 trillion in M&A transactions (that’s 30% higher than the previous record), and the U.S. reported $2.9 trillion in transactions (that’s 40% higher than the previous record). While 2021 may have been a record-breaking year for middle-market M&A activity, 2022 should be an excellent year for sellers. 

Last year several factors drove deal activity to new heights:

  • Pent-up activity from the previous slow year because of the COVID-19 pandemic
  • A wealth of capital seeking investment opportunities
  • Potential tax changes this year
  • Strong economic growth
  • Continued low-interest rates
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2022 Oil & Gas Report

In dollar value alone, the oil & gas sector is the world’s largest industry, employing a massive workforce of around 4 million people globally. The major oil companies account for a significant percentage of a country’s national GDP. The world’s largest producers of oil are the U.S., Saudi Arabia, and Russia.

In 2021, the oil & gas sector recovered well, with oil prices climbing to their highest levels in six years. Total revenues for the oil & gas drilling sector in 2021 came to approximately $2.1 trillion. The global oil & gas market is forecast to reach $7425.02 billion in 2025. That’s a compound annual growth rate (CAGR) of 6%. This growth is primarily due to companies shifting their operations during recovery from the effects of the COVID-19 pandemic. Low-interest rates positively impacted the oil & gas industry in most developed countries. 

The global oil & gas exploration and production sector account for a large chunk of the global economy. The growth of this sector is expected to increase in the future, with OPEC crude oil production averaging 34.15 million b/d in 2022.

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2021 Was a Record Year For M&A - And 2022 Could be, Too

After the trials and tribulations of 2020, no one really knew what to expect going into 2021. Yet, for the world of M&A, it couldn’t have been a more pleasant surprise.

Last year has most certainly been a record year for M&A deals, making a huge comeback from 2020. In 2021, the number of announced deals exceeded 62,000 globally. That’s up an unprecedented 24% from 2020. Deal values reached an all-time high of $5.1 trillion.

Almost all sectors are showing signs of recovery from 2020. Values are up and multiples are rising, with strategic M&A multiples at an all-time high (a median multiple of 16x EV/EBITDA).

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Proposed Changes to U.S. Section 1202 Tax Reform: What You Need to Know

WHAT IS SECTION 1202?
In the United States, Section 1202 is known as the Small Business Stock Gains Exclusion. It is a section of the IRS code that allows capital gains from Qualified Small Business (QSB) stock to be exempt from federal taxes when selling. But not all small business stocks qualify:

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