Benchmark International is pleased to announce the transaction between Topsham-based LaddersFree and AIM listed REACT, in a deal worth up to £8.5m.
Established for 20 years, LaddersFree is a commercial window cleaning business serving independent, regional, and national customers across the UK. With an established network of over 300 approved service partners, LaddersFree utilises local window cleaning companies to offer its services to all areas of mainland UK.
Since its inception, LaddersFree has grown organically. Unaudited financials for the year to 30 November 2021 show that it generated revenue of c£3m and a pre-tax profit of c£1.4m.
REACT is an industry leader in the provision of specialist cleaning, working in challenging environments such as hotels, prisons, crime scenes, and cruise ships.
This is REACT Group’s second acquisition and represents a further step in the company’s ambition to achieve its stated growth strategy. The transaction provides REACT with the opportunity to diversify its service offering through expansion into complementary markets, and to leverage existing resources to accelerate growth.READ MORE >>
2021 was a strong market for business owners looking to sell their companies. The market remains ideal and will do so as we move into the first quarter of 2022. As we are in the middle of this year, there is no better time to consider putting your business on the market.
M&A activity was moving at a record pace in 2021, thanks to economic recovery, a strong stock market, low-interest rates, rapid digitalization, more SPACs, confident boardrooms, and available debt. The U.S. had reported more than $2 trillion in M&A activity in 2021, with the year on pace to be the most active in history. Not to mention that the second quarter of 2021 was the third straight, with total global M&A value surpassing $1 trillion. That is the first time this has ever happened in three consecutive quarters. So even in the middle of the year, when things typically slow down, we are still seeing a great deal of investment, and the market is still flooded with capital.
The Global Marketing Consulting Market
The global marketing consulting market is expected to grow by $3.83 billion between 2022 and 2026, increasing at a compound annual growth rate (CAGR) of 4.75%.
Market growth is being driven by various factors, including continued education, the rising need for improved customer digital experiences, and the providing of custom-made solutions.
Because the global marketing consulting market is rather fragmented, we are seeing vendors trying to remain competitive by deploying growth strategies such as forming strategic partnerships. Over the next four years, 35% of the global market’s growth will originate from North America.READ MORE >>
Benchmark International is pleased to announce the sale of Leicester-based Air Projects to Witham-based EA-RS.
Air Projects is a specialist ventilation engineer working on healthcare and commercial projects from basic extraction systems to hospital theatres and laboratories. Air Projects also provides expert advice on an array of services in ventilation, fume extraction, fire damper testing and healthcare compliance.
EA-RS is a provider of intelligent, sustainable, and compliant fire and security systems in the UK. The company installs and maintains a broad range of systems covering critical infrastructures such as data centres and healthcare facilities and serves several other markets such as commercial property, education and social housing.
EA-RS has been backed by Rockpool Investments since 2021, and Air Projects is the seventh company EA-RS Group have acquired since last year.
This acquisition supports the group’s strategy to further broaden its geographic reach and to present new opportunities throughout the UK. Additionally, the transaction will expand both organisations range of services to their respective client bases, including fire damper testing for EA-RS' clients, facilitating growth and enabling synergies between all businesses within the group.
Shaun Sutton, managing director of Air Projects, said this about working with Benchmark International: “Many thanks to James, Charlotte and Roger for their expert advice and professional approach to the whole acquisition process for us. From initial marketing through the negotiations and final due diligence stages, James and Roger have remained flexible, knowledgeable and most of all calm and collected in their manner, which has made the whole process less stressful than it could have been.”READ MORE >>
Benchmark International is pleased to announce that it will be sponsoring DEALSOURCING 2022 on 13th September at the Dorint Hotel Frankfurt/Oberursel.
Dealsourcing is a key event in Germany for M&A professionals, hosting hundreds of participants including private equity firms, funding platforms, restructuring advisors, M&A advisors, and due diligence professionals, to name a few.
As the most efficient networking event of the German corporate banking and finance community, DEALSOURCING provides Benchmark International with the prime opportunity to meet the right contacts for its sell-side mandates, providing us with a unique opportunity to showcase the opportunities we represent.
As well as networking opportunities, the event also include 30 innovative workshops to enhance our opportunities to connect with the best buyers for our clients.
Do you want to be featured and showcased in front of leading dealmakers? Naturally, we present only a select number of companies for each event, so we would encourage you to contact us now to ensure your business is included.
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We have been in an unprecedented bull market. I use the phrase here broadly as the public markets have been flying for over a decade, and the M&A market has seen similar levels of growth. Spurred on by aggressive monetary and fiscal policies and a relaxed regulatory environment, the S&P 500 has grown 15.47% as of the time of this writing from the bottom on March 9, 2009. Similarly, the DJIA (The Dow 30) has grown at an annual clip of 13.64% over the course of this thirteen-year bull market. Remember what the rule of 72 demonstrates- that money doubles every 6 years at 12% and in less than five years at 15%. This is a remarkable rate of growth when you consider this market has spanned nearly 1/7th of a century.
But bull markets must end. Markets do work in cycles. Much like our natural habitats require destructive fires to seed future growth and a healthy ecosystem, so too does the market. I’m not referencing the concrete jungles we find ourselves in today, but rather our natural environments. Bear markets reintroduce a rational approach to investing that had long been sidelined in favor of momentum and emotion-based investment “theses."
Further, bear markets tend to focus investments toward the highest quality of companies, known as a flight to quality. This clearing of the playing field, separating the wheat from the chaff, will often spur innovation and future growth. So a bear market is as natural to the market dynamic as is a bull market. These countervailing forces are required for regeneration.
The bull market created trillions of dollars of dry powder for buyers to deploy in the coming years. The balance sheets of corporations, large and small, are replete with cash there to deploy in pursuit of their stated strategic goals. The best of markets tends to flood the M&A market with excess buyers, many of which lack the track record, experience, credibility, and true access to funding required to transact successfully. Bear markets tend to weed away many of these less credible buyers creating a similar flight to quality detailed in the above discussion about the public markets. And while the cost of debt will tick up and valuations may similarly tick down, the likelihood of actually consummating a transaction increase as there is a much better chance that the buyer selected can get a deal done.
I tend to view my decisions in life through a very specific lens- my expected value lens. If one were to look at an M&A transaction through that lens, we would likely find the expected value of the proceeds from a transaction as being higher, even if valuations tick down, because the likelihood of closing is greatly increased. And frankly, while the cost of capital on senior debt will rise over the course of the year, given the aforementioned stores of cash in their coffers, buyers will have the ability to utilize more equity to bridge any gaps in the capital stack. Private Equity funds have more than $2 Trillion of dry power. They also have a mandate to put capital to work regardless of the cost of debt lest they face aggressive headwinds during their next fund raise. Their Limited Partners, known as LPs, require that they put the money to work. Deals will continue to happen and we may in fact see more deals in the next eighteen months or more as buyers finally draw down on the excess stores of cash build-up that resulted from inflated valuations and bidding wars with less credible buyers.
Sellers must consider several factors when considering a sale. Of course, valuation and a healthy economic environment are among those factors but they don't have to be the determining one. We are often faced with life changes of which we have no control. Some of us simply reach a stage where we no longer wish to carry the burden that invariably comes with owning and running a business. Or, God forbid, we encounter health challenges personally or in our family that requires that we focus our attention elsewhere. Perhaps we come to the realization that we are no longer the right caretaker for the business? That the business has reached a level where our skills no longer map to what is required to successfully steer. Whatever the reason to sell your company, we can only control the controllables.
Just like in the public markets, if we try to time it perfectly, we will invariably fail because the objective was unattainable. Selling one's business is a life-altering decision. Selling a business can be both liberating and gutting. Sellers are at once monetizing their life's work and entrusting someone else with its care. The stakes are high. When making that determination, it is critical that sellers consider all of the critical variables. While valuation, market conditions and timing are among the variables worthy of consideration, they are merely inputs to a multivariate equation. Often, upon careful consideration, sellers determine that the qualitative elements are more important than are the quantitative ones.
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Benchmark International is delighted to announce it has officially opened its new offices in Germany.
Taking residence on the eighth floor of the Sky Office in Düsseldorf, the large and modern offices opened in 2009. With an aesthetically pleasing design both inside and out, the building creates an inspiring working environment in a first-class location.
In close proximity to Düsseldorf International Airport and near the city centre of Düsseldorf, the building is very well positioned from a logistical standpoint.
A perfect fit for Benchmark International, the Sky Office will be a great representation of the Benchmark brand in Germany.READ MORE >>
Benchmark International is pleased to announce the acquisition of Kent-based Fuse Rail by international construction and civil engineering group, John Sisk & Son (Sisk Rail).
Fuse Rail services electrification and plant requirements within the rail industry. Working on behalf of Network Rail, recent projects have included a new electric distribution cable at a supply cable in Lydden, installation of a new conductor rail on the Sevenoaks tunnel refurbishment, and new reactive DC cabling for the Eastbourne substation.
With a 160-year history, Sisk Rail is an international construction and civil engineering business undertaking structural remediation, buildings refurbishment, mechanical and electrical planned maintenance, litter clearance, earthworks, fencing, drainage clearance and repairs on behalf of Network Rail and other train operating companies. The company has offices throughout Ireland, the UK and mainland Europe, specifically the Benelux, DACH and Nordic regions.
The acquired company will continue to operate under its current branding and management team.READ MORE >>
Benchmark International is pleased to announce that it has been ranked in the top 10 by Mergermarket for the number of deals it has conducted in Ireland.
Bank of America, PwC and JPMorgan are amongst the companies to also rank in the top 10.
An Acuris company, Mergermarket delivers M&A intelligence, data and research. To qualify in its league tables, transactions must be over 5m USD in value and publicly available.
James Thornton, COO at Benchmark International, commented: “We are delighted to have been ranked in Mergermarket’s Global & Regional League Tables for the first quarter of 2022. To be ranked in these league tables is further acknowledgement of the hard work and effort our teams put into every transaction.
“Having only established an office in Ireland less than five years ago, it is great to see that we are growing our footprint and have established ourselves as a distinguished institution in this location by conducting a number of deals over 5m USD, competing with M&A industry giants.
“Over the course of the last year, Benchmark International has expanded its international reach further, establishing an office in Germany, and I’m looking forward to seeing what our new team will achieve, and seeing Benchmark International on the German league tables as well very soon!”READ MORE >>
Benchmark International is pleased to announce the acquisition of Dublin-based Real Regulatory by private equity-backed tranScrip.
Real Regulatory is a consultancy firm specialising in European regulatory affairs, quality systems and compliance for products including medicines, medical devices, and drug device combinations. Headquartered in Dublin, the company also has offices in Cambridgeshire and Malta.
Founder and managing director, Karen Real, who has more than 35 years’ experience in the pharmaceutical industry, will remain with the business moving forward.
tranScrip is a fast-growing contract drug development organisation which supports the development and lifecycle of medicines. It is backed by private equity firm, Palatine, and the deal is the first acquisition made by the company since securing Palatine’s investment in 2021 via its dedicated Impact Fund.
The strategic acquisition significantly expands tranScrip’s regulatory affairs capabilities, strengthening its ability to provide comprehensive support to its customers.READ MORE >>
Digital tools have been advancing in business operations for years, but today they have become essential for most companies, especially since the onset of the COVID-19 pandemic. The global crisis forced businesses to find ways to connect their employees to each other and their customers without being in person. This storyline became so prevalent that, in the first year of the pandemic, 60% of businesses moved their workforces to the cloud. Two years later, this number continues to increase.
Such demand for rapid digitalization has become a key driver of M&A deals, and continues to create more opportunities for growth and transactions. As a result, many organizations are also adopting tools to facilitate the M&A process on more digital terms. These tools include data and analytics during due diligence, platforms that support fast-moving transactions, and cloud-based services. You can take a deeper dive into the facets of post-COVID due diligence here.
Benchmark International has advised on the transaction of Irish headquartered O’Flynn Medical and O’Flynn Innovation, to Healthcare 21. O’Flynn will become part of the Healthcare 21 Group, which AddLife acquired in 2021.
Established in 2000, O’Flynn Medical is a leading provider of medical equipment and PPE to Ireland’s care home and domestic markets offering the sale, rental, and associated services and maintenance for a range of specialised products.
O’Flynn Innovation was later established in 2011 for the distribution of automated garment dispensing control systems. Together, the group has become a trusted distributor of medical equipment to the care home and domestic markets.
Established in 2003, Healthcare 21 is an independent medical device distributor offering sales, marketing and technical solutions for many of the world’s leading healthcare equipment manufacturers. The group has an annual revenue exceeding €159 million and more than 450 employees across four European countries.
The acquisition provides Healthcare 21 with the opportunity to expand its portfolio into the rental market segment, to become the leading provider in Ireland. The acquisition also provides entry for Healthcare 21 into the bariatric market segment.
O’Flynn Medical will continue to trade under its existing name and remain headquartered in Macroom, Cork.READ MORE >>
Benchmark International is pleased to announce the acquisition of County Cork-based Velopi by Boston-based Educate 360.
Established in 2007 and headquartered in Kinsale, Ireland, Velopi provides training and consultancy services, specialising in the niche of project management. The firm has a list of renowned clients that includes Abbott and Pfizer.
Educate 360 is a professional training partner that designs training, coaching, and consulting solutions to improve efficiency, increase cross-functional alignment, and drive results. The acquisition enables Educate 360 to have a greater reach into the European market and the ability to build upon Velopi’s existing clientele.READ MORE >>
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.READ MORE >>
Benchmark International has successfully advised on the sale of Edinburgh-based 7 Elements to Harrogate-based Redcentric.
7 Elements is a CREST accredited and award-winning technical assurance services company providing industry-leading security testing, incident response, and bespoke consultancy services.
Established in 1997, AIM-listed Redcentric is a managed service provider. The company operates across five locations and has over 500 employees.
This acquisition expands upon the cyber security skills, capabilities, and services of Redcentric, complementing a growing portfolio, while addressing increasing market demand and customer requirements for security products and support.READ MORE >>
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.
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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.
Benchmark International has advised on the transaction between Loch Lomond-based Absolute Solar and Wind (Absolute) and Cheshire-based RSK.
Established in 2007, Absolute provides renewable energy design, installation, and maintenance services for commercial and industrial renewable energy projects, primarily in the solar sector.
Working with customers such as Scottish Water, Exeter City Council, Edinburgh Airport, UK Research and Innovation, and local authorities, the Absolute team delivers solar, wind and low carbon heating services in conjunction with its supply chain.
RSK is a global leader in the delivery of sustainable solutions. The transaction marks part of RSK’s continued strategic expansion and is the 28th acquisition by the company this financial year.
Following the transaction, Absolute will join RSK's Agriculture, Land and Property Management (ALPM) division under the direction of Ian Strudwick. The company will continue to be led by Absolute director Tom Newall.READ MORE >>
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.READ MORE >>
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.READ MORE >>
Benchmark International is pleased to announce to acquisition of Livingston-based Boyd Brothers by British Engineering Services.
Family-founded Boyd Brothers is an electrical and civil engineering contractor with over 50 years’ experience. Since its establishment, it has grown to become a specialist in electrical vehicle charging point installations.
For over 160 years British Engineering Services has been engaged in the testing, inspection, and certification of industrial machinery via its highly skilled engineer surveyors and engineering consultants. The acquisition is British Engineering Services' sixth since 2019 and will enhance Boyd Brothers’ electrical division, as well as make specialist services more easily accessible to customers.
Stephen Boyd, managing director at Boyd Brothers, commented: “We’re really happy to have joined the British Engineering Services Group. This is a fantastic move for both businesses. Their growth over the last few years is impressive and we’re excited to be a valuable part of their future.”
Paul Trivett, MD of Electrical and Consultancy at the British Engineering Services Group, said: “This is another great addition to the British Engineering Services Group. We’ve spent lots of time with the Boyd Brothers team over recent months and it’s very clear they share the same values and priorities as the wider Group. Not only do they always put their customer first, but they’re very focused on making sure nothing is left to chance. This will further enhance our presence in the electrical safety field, which we started to develop further with the acquisition of Lantei in December 2020.”READ MORE >>
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?READ MORE >>
Benchmark International is pleased to announce that Derby-based CFR has been acquired by a private investor.
An exclusive supplier for Felfoldi in the UK, CFR is a distributor of a range of confectionery products including flavoured straws, baked goods & home baking kits, canned drinks, and sweets. Other high-profile customers include national retailers such as Asda, Poundland, and B&M Retail.
CFR was acquired by a private investor, allowing shareholder Christopher Rudd to pursue retirement plans.
Commenting on working with Benchmark International, Mr Rudd said: “Thanks for all your hard work, efforts and your input. You’ve been a huge part of where we got to today.”READ MORE >>
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.READ MORE >>
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.
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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.
Benchmark International is delighted to announce that the sale of County Antrim-based ventilation systems installer RGM Vent, where Benchmark International acted as lead adviser to the sellers, won Deal of the Year at the Insider Northern Ireland Dealmaker Awards.
The deal was deemed significant as Benchmark International’s Transaction Team maximised value for RGM Vent and maintained excellent relationships with the client, resulting in four referrals from the client and accountant to date, as well as a testimonial from CEO at RGM Vent, Raymond Murphy:
“March 2019 was the day I had my initial meeting with Benchmark and from the moment I met Nick and Jonathon I knew I was making the correct decision in going with Benchmark Int.
Jonathon was my key point of contact and he was backed by Alex, the process went great throughout and I would definitely recommend Benchmark.”
The team overcame several complexities during the deal surrounding due diligence, tax advice, restructuring, and differing shareholder aspirations.READ MORE >>
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.READ MORE >>
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.READ MORE >>
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.
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.READ MORE >>
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.READ MORE >>
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.
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.READ MORE >>
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.READ MORE >>
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.READ MORE >>
First off, I’m using the term “post-covid” gingerly, since, as I am writing this article, we are going through a surge of the Omicron variant. This article is intended to shed light on deal structures that we saw in 2021 and compare them to pre-covid years, as well as surmise future structures.READ MORE >>