Private Equity (PE) or Private Equity Groups (PEGs) combine large amounts of capital from various sources and directly invest it in private companies or the buyout of public companies (resulting in the delisting of public equity from the stock exchange).
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Understanding Private Equity
Benchmark International Successfully Facilitated The Transaction Between GloveIt, LLC And Ruscan Chem Inc.
Benchmark is pleased to announce the transaction between GloveIt, LLC and Ruscan Chem Inc. The transaction represents a strategic, vertical expansion for the Ruscan Chem team.
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Benchmark International Successfully Facilitated The Transaction Between Demetrius Of Forty Churches, LLC, DBA Ahlers Meals And A Private Investor
Benchmark International is pleased to announce a private investor’s acquisition of Demetrius of Forty Churches, DBA Ahlers Meals, a leading home-delivered meal service.
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Benchmark International Successfully Facilitated The Transaction Between Digital Prism Advisors, Inc. And Mod Op
Digital Prism is a management consulting firm specializing in digital strategy and transformation guidance. Digital Prism helps its clients achieve their growth strategies through technology-driven improvements, enabling market expansion, product innovation, customer acquisition, and efficient operations.
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Benchmark International Successfully Facilitated The Transaction Between Premier Grease Recycling & Services LLC And Texas Feed Fat Co., Inc.
Premier Grease Recycling & Services LLC is a waste oil and removal company headquartered in Abilene, Texas. The company provides recycling services to their clients, supplemental container system installation, and repairs at client facilities.
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Benchmark International Successfully Facilitated The Transaction Between Awnclean U.S.A., Inc. And The Valcourt Group
Benchmark International is pleased to announce the acquisition of Awnclean U.S.A., Inc. And The Valcourt Group.
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Benchmark International Successfully Facilitated The Transaction Between Kevco Builders, Inc. And A High-Net-Worth Individual
Benchmark International is pleased to announce the acquisition of Kevco Builders, Inc. And A High-Net-Worth Individual.
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Benchmark International Successfully Facilitated The Transaction Between A.D.A. Supplies & Leasing Services Inc. TO Safety Supply Group
Benchmark International is pleased to announce the acquisition of A.D.A Supplies & Leasing Services Inc. to Safety Supply Group.
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Benchmark International Successfully Facilitated The Transaction Between George W. Evans & Associates, Inc And Nationwide Brokerage Solutions Insurance Agency, Inc.
Benchmark International is pleased to announce the acquisition of George W. Evans & Associates, Inc And Nationwide Brokerage Solutions Insurance Agency, Inc.
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Interest Rate Cuts Are On The Way
Now that 2024 is underway and the economy is healthy, we can also look forward to some good news for the markets. Top banks and economists are forecasting that interest rates will be cut starting in late Q1 into Q2.
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When Is The Right Time To Sell Your Business?
When it comes to selling a company, quite a few factors need to be considered to extract the most value from a sale.
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A Guide To Preparing Your Business For Sale
You can take several steps to prepare your business for a sale that can significantly improve the amount of value you extract from a buyer. The factors that affect how potential acquirers will perceive your company apply whether you plan to exit your business in the short, medium, or long term.
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Benchmark International Successfully Facilitated The Transaction Between Lodging Source, LLC And Olifant Legacy
Benchmark International has successfully facilitated a transaction between Mount Pleasant, South Carolina-based Lodging Source, LLC, and Washington, DC-based Olifant Legacy.
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Benchmark International Successfully Facilitated The Transaction Between QT Industries, LLC (DBA QT Manufacturing) And KB Components
Benchmark International is pleased to announce the transaction between QT Industries, LLC and KB Components. This transaction signifies a strategic expansion for the team at KB Components and further establishes their foothold in their geographic area.
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Benchmark International Facilitated The Transaction Between CFA, Inc. And Bowman Consulting Group Ltd.
Benchmark International is pleased to announce the transaction between CFA, Inc. and Bowman Consulting Group Ltd.
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Unlocking Business Success: On-demand Webinar - Taking Control Of Your Growth And Exit Strategy
In the fast-paced business world, navigating growth and planning for a successful exit strategy is a challenge every business owner eventually faces. The journey to success involves understanding the nuances of value, timing growth in the market, and ensuring a perfect fit for your business.
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Benchmark International Successfully Facilitated The Acquisition Of Salesforce Integrator Mirage Computer Systems GMBH (“Mirage”) By Unaric Holding Limited
Mirage, based in Aulendorf, southern Germany, was founded in 1995 by Dieter Härle. The company is a specialist in generic computer telephony integration (CTI). The focus is exclusively on CTI solutions for Salesforce. Mirage’s solution is a software application that connects Salesforce with a phone system to gather information, make protocol calls, and generate workflows.
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Benchmark International Facilitated The Transaction Of Sun Glass, LLC. And Safelite Fulfillment, Inc. (DBA Safelite Autoglass)
Benchmark International is pleased to announce the transaction between Sun Glass, LLC’s Auto division, and Safelite Fulfillment, Inc.
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Benchmark International Sucessfully Facilitated The Transaction Between Flo-systems Inc. And Pumpman Holdings
Benchmark International is pleased to announce the transaction between Flo-Systems,Inc. and PumpMan Holdings.
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What’s My Business Worth?
Scaling Made Simpler
Building a successful business is hard, but many become their own boss and start a business. Being a business owner is challenging, and many businesses fail.
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The Importance Of Confidentiality When Selling A Business
Selling a business can be a sensitive and complex process. It requires careful planning and execution, and one of the most critical aspects is keeping the sale confidential.
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Benchmark International Successfully Facilitated The Acquisition Of Enth Degree By Q Link
Enth Degree facilitates the implementation and management of network connectivity from financial institutions and organizations to the global financial messaging network.
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Building A Contracting Business To Sell
Within the last decade or so, consolidation has become the name of the game within many of the sectors in the construction and contracting industries.
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Unlocking Your Company's Potential: The Transformative Power Of An M&A Firm
If you are considering selling your company, planning your retirement or succession plan, or seeking a growth or exit strategy, you have quite a few options. You can find a buyer and pursue a deal on your own.
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Exploring The Advantages Of Family Offices For Sellers
Family offices is a private wealth management firm established by an ultra-high-net-worth family. They provide that family personalized services, including investment management, financial planning, estate and tax planning, and more.
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Benchmark International Successfully Facilitated The Transaction Between George W. Evans & Associates And Nationwide Brokerage Solutions
Benchmark International has successfully facilitated the transaction of George W. Evan & Associates. They are a Managing General Agent that services individual and commercial insurance agents. The firm lends its expertise in helping in
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How To Sell In A Buyer’s Market
In recent years there has been a significant degree of volatility in the market, but it is generally agreed that we will likely enter a “buyer’s market” soon. Most hear “buyer’s market” about real estate or consumer goods,
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What Is Seller Financing?
Seller financing is when the seller of a business acts as a lender to the buyer by offering financing for all or some of the purchasing price. The Buyer and Seller negotiate the terms of
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Why You Should Sell Your Communication Business In 2023
The communications industry has witnessed rapid changes and advancements in recent years, driven by technological innovations and changing consumer demands.
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What Is The Difference Between Selling A Business With Benchmark International Versus Without?
If you are considering selling your business, there are many reasons why you are better off with the guidance of a professional M&A team. There are many reasons why partnering with Benchmark International to sell your company can make a significant difference in both the process and the result.
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How To Get Value Beyond EBITDA
When selling a business, most owners focus on the bottom line, typically represented by EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). However, while EBITDA is an essential metric for valuing a business, it is not the only one that matters. There are other factors that potential buyers consider when evaluating a business, and as a seller, it is crucial to understand these factors to get the best possible value for your company.
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Benefits Of Selling Your Staffing Company In 2023
The staffing industry has experienced steady growth over the past decade, which expects to continue in the foreseeable future. The lower middle market is an ideal space for mergers and acquisitions in the staffing sector, as this industry segment typically comprises small and medium-sized businesses. For staffing companies in this market, selling to a more prominent firm can offer a range of benefits.
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Why Do I Need An Exit Strategy?
Don’t Delay
As a business owner, an exit plan is critical to preparing you and your company ready for retirement or your next act. Unfortunately, many business owners do not realize the importance of exit strategies, so they don’t feel like it’s worth taking the time to craft one. This is often a huge mistake. It doesn’t matter if you do not plan on selling or retiring soon. However, it’s wise to have an exit strategy for several reasons.
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Want To Sell? What To Look For In An M&A Firm
If you are considering selling your company, you have several options for pursuing the sale, and you have quite a few decisions to make. And this is a journey you do not want to take lightly. You’ve worked so hard to build your business. When you sell it, you want everything right to get the value you deserve. In addition to extracting value, you want the process to be as painless as possible. These are the reasons you should consider having the representation of a reputable mergers and acquisitions firm. Partnering with the right M&A advisor can significantly affect your sale price.
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Preparing for Due Diligence: Sell-Side
Due diligence is a buyer’s detailed investigation into the matters of your company in preparation for a possible sale transaction. For many business owners, this is one of the most dreaded parts of selling their business. After a letter of intent (LOI) is signed and a price range is agreed to, buyers have the right to dig into the business to ensure that they know what they are buying, and to identify any potential risks of owning the business. While buyers and sellers have different objectives and motives, both parties benefit from a thorough and efficient processes. Whether your company is pursuing a capital infusion or positioning itself for an acquisition by a strategic or financial buyer, due diligence is a critical component of every investment. It’s an intrusive process and, like everything else about the sale of your business, you need to be prepared.
When a potential buyer assesses your company, they will want to fully understand the essentials of the business such as organizational information, financial records, regulatory matters and litigation, employment and labor matters, and many others. When your company is well-prepared for the exit process, long before it is anticipated, not only will it make the company look more attractive to potential buyers but it will also maximize the value and expedite the transaction timeline. If not properly prepared, this can result in an incredible demand on a company and its resources, give a buyer the perception that the company is disorganized, and create operational difficulties within the company.
Below are four ways to prepare for due diligence and secure the deal you want:
Start with a Due Diligence Checklist
Most buyers will provide the target company with a due diligence checklist but, before receiving that list, sellers should ensure that common checklist items are available, up-to-date, accurate, and organized. The data needed for the due diligence process should be in order and ready to be uploaded to a virtual data room within a couple of days of initiating due diligence. This is not only necessary in the event of an acquisition, but it is also a valuable discipline to maintain as the company grows.
Invest in Professional Accounting Practices
The due diligence process is dependent upon the strength of the seller’s accounting system. It is essential that the company’s financial reports present potential buyers with a clear story, allowing them to fully evaluate the company’s earning potential. Buyers will be concerned with all of the target company’s historical financial statements and related financial metrics, as well as the reasonableness of the projections of its future performance. A business’ financial records should be clearly stated and easy to follow. If not, this could create confusion, misunderstanding, and devaluation.
Planned transactions have failed, even though the business itself was healthy and growing, when the financial reporting was outdated, inaccurate, or incomplete, and the buyer could not trust the data. Accurate financial statements are also necessary for the seller to support the business valuation. What assets does the business have? How profitable is the business? What is the working capital? What are the growth trends? All of these are major factors in the valuation of the business, so the data representing them needs to be accurate and precise.
To avoid issues, it is recommended that, before going to market, a seller contacts an independent accounting firm to review or audit the company’s financial statements. This will help to ensure that the company financial data is accurate and complete, will instill a sense of confidence from the buyer, and will more likely result in an efficient and successful due diligence process.
Engage Qualified Representation
A team of good professional advisors is crucial to a successful sale of a company. These advisors will steer sellers in terms of what they need to do to get their company ready for sale. Tap into these resources because they will have dealt with enough transactions to know what you should be focusing on to ensure a successful sale. Some recommended professional advisors include, but are not limited to, a M&A broker, an accountant, a tax advisor, a M&A lawyer, a wealth advisor, an investment banker, and a trusts and estate lawyer, if needed. With advance planning and the help of good advisors, a seller can ensure that his or her best interests are fully represented, common pitfalls are avoided, and the transaction will run smoothly and efficiently.
Responsiveness to Requests
During the due diligence process, potential buyers will seek to comprehensively understand the business practices behind a company’s earnings. It is the sellers job to guide the buyer through the learning curve. Respond to the buyer’s due diligence requests in an organized, detailed, and complete manner. If there are requests for missing data, respond punctually. This responsiveness allows the seller to gain credibility with a buyer, and provides buyers additional comfort with the quality of the business they are buying.
Conclusion
Due diligence is a vital and complex part of M&A transactions. Preparing beforehand can help a company position itself for higher valuations, stronger negotiations, and better outcomes. Understanding the importance of due diligence to both parties in a transaction, planning in advance, enlisting the support of specialists, and investing the time to run a thorough due diligence review early in a transaction will help prevent unwelcome surprises and potential liabilities for both parties.
Author
Kayla Sullivan
Associate
Benchmark International
T: +1 813 898 2350
E: Sullivan@benchmarkcorporate.com
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How to Avoid Leaving Money on the Table When Selling a Business
The sale of a privately-owned business is often the most significant financial event in the life of the owner. It marks the culmination of years of hard work and converts paper wealth into real wealth. It is a one-time opportunity with no do-overs. Every business owner surely desires the best economic outcome, yet, time and time again, business owners leave money on the table by not adequately preparing for the sale of their company. This article suggests five actions that private business owners can take to avoid leaving money on the table when selling their business.
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How Do I Make Sure my Business is Left in Good Hands When I Sell?
Find the right partner.
Partnering with the best team of experts to help you sell your business is the most important thing you can do when seeking a buyer you can trust. Not making the right choice can cost you time and money. Because you want to sell at the best time, you don’t want to waste time talking to the wrong people. By working with an experienced and globally renowned mergers and acquisitions team such as Benchmark International, you can mitigate the risk of letting an under-qualified broker deal with the sale of your company. You’ll want to make sure the firm you choose has highly specialized experts in your area of industry and the kind of global connections that can find the best buyer for your business.
Stay involved in the process.
Even if you work with an experienced firm to facilitate the sale, you want your relationship to be a partnership. They are going to work hard for you, but you know your business better than anybody. Finding a team that wants you to remain engaged in the process will result in a sale you can feel good about. By staying involved, you are also giving prospective buyers added confidence in their purchase.
Know your magic number.
It is crucial that you have an idea of your company value before putting your business on the market. Any reliable buyer will expect to be given accurate financials about your business. It is recommended that you seek the help of an organization that has the expertise in achieving maximum values for businesses. They will help you assess the value, fix weaknesses, boost strengths, and form your ideal business exit strategy for maximum success.
Be honest.
Represent your company accurately when dealing with prospective buyers. Inflating numbers or trying to cover up issues can result in a failed deal when the actual financials come under review. If you want to trust the buyer with your business, you should expect that they would want to trust you, as well.
Be prepared.
Being adequately prepared is also an important step in selling to the right buyer. Make sure you have all the documentation in order regarding finances, profitability, real estate, and staffing. Make sure inventory is fulfilled, records are current, and taxes are paid. Being prepared can affect the price your business will command in the marketplace, as well as the level of interest from quality buyers.
Think ahead.
Do not get so focused on the sale of your business that you are not thinking about the transition period. An experienced partner can help you keep your focus in the right place and ensure that you and the buyer are on the same page, and both are properly prepared for the transition.
There is plenty to consider when taking on the daunting task of selling a business. Keep in mind that while you are an expert in your particular business, arranging its sale may be beyond your range of expertise. Relying on a knowledgeable team such as your partners at Benchmark International can ensure that you get the value you deserve and sell to a buyer you can trust.
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Is It Time To Sell My Business ?
Determining whether it is a good time to sell your business is one of the most challenging decisions a business owner has to make. There are innumerable factors that affect this decision and it’s important to not get overwhelmed. A few things to take into account are financial situation, the company’s future/outlook, the opportunity cost of time, and the type of deal structure being pursued.
Financial Situation
Usually, the first factor that business owners consider when making the decision to sell is the financial impact this will have on their lives. It’s important to analyze one’s current lifestyle and how a potential sale would change that – what the payoff would be. Unless a business owner is in a troubled situation, they’ll want to make sure that the decision to sell will not hinder their long-term lifestyle. A hasty decision here can have a catastrophic economic ripple effect. But, selling at a time that maximizes economic profit can potentially result in lifelong financial freedom.
Company’s Outlook
If an owner is at a point to even consider selling a business, there’s a high probability that they’ve put in a significant amount of time, effort, and capital into it. Pondering this decision generally stems from a plateau in company growth or changes in the industry landscape. When this stage is reached, one must determine if they are in a position to take the company to the next level or if it is better to move on after building it to this point. It’s important to understand that being aware of “when to get out” is not a slight on the owner. Rather, it is the recognition of an opportunity to pursue other goals. The business has been a large part of life, the employees are important, and the hopes of a successful future is why companies are built. So, the key is to make sure that the “hands” the company is going to be in moving forward satisfy the needs of all the key people that are going to be impacted by a
potential transaction.
Time
Letting go of something that has been such a large part of one’s life can be very daunting. The fear that this is “the end of the line” for a business owner is often what doesn’t allow an individual to make a decision with sound judgement. The opportunity cost of time needs to be taken into consideration – that is, what you can allocate time to in life that you were unable to do before. Perhaps an exit can allow more time with family or another business venture; all such options open up more once the full scope of a business sale is analyzed beyond the initial fear.
Deal Structure
The type of deal for a business sale is arguably the most important factor when making the decision to sell. The beauty about this is that deals can be structured in almost any way imaginable. Many owners think that selling a business is an “all or nothing” type of transaction. But the reality is that majority of business acquisitions are centered around partial sales and/or long-term seller incentives. It is perfectly reasonable for a founder/owner to retain ownership to “keep some skin in the game” or to have a management agreement that allows them to continue being involved in the company. Owners need to educate themselves on the kind of deal structures most suited for them and understand that the scope of deal types is far more customizable than people realize.
As has been pretty clear, there is no cookie-cutter process behind making the decision to sell a business. Individuals need to take countless variables into consideration when doing something of this magnitude. A great way to begin this process is to narrow down what aspects of the decision are most important to the owner and then analyzing each variable individually. Most importantly, don’t forget that if a deal is thinkable, it is achievable.
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Is The End Near?
For the last several years, the saying has been “There’s never been a better time to sell.” Multiples have been high. Buyers have been plentiful. Debt has been cheap. Optimism has run strong. The truth is, it is undeniably still a great time to sell; it’s never been better. But …
It takes time to sell and for the first time since emerging from the Great Recession, certainty about whether or not the later part of the new year will be a good time to sell- the best ever – is down. Anyone who says they can predict these markets is a fool. But the probability of a turn is certainly high and increasing as we begin this year.
The good news is that the signs indicate not an immediate downturn but rather one that can still be beaten to the finish line. Selling a business should take six months to a year. Thus anyone moving out now on a process should be able to take advantage of these good times – if they get started fast and, more than ever, move diligently and place a higher emphasis on certainty of close when selecting their winning bidder.
The change in the tea leaves really began in November and accelerated throughout December. Some of the key indicators include:
- In a December Duke University poll, almost half of responding U.S. CFO’s stated that they believed a recession was likely to occur in 2019. Even more compelling, more than 80% of those CFO’s felt recession would strike by the end of 2020.[1]Right or wrong; the respondents to this poll are the key influencers of the amount of M&A activity generated by strategic buyers – and those most responsible for bad deals. If the economy does sour, or they simply believeit is going to sour, they will not be sticking their necks out for adventuresome acquisitions at record multiples.
- The public markets provide several signs. The first is the relative comparison of the large caps, to the midcaps, and then to the small caps. The M&A market for privately-held companies can essentially be seen as a microcap extension of the public markets. While we all know the public markets did not do well last year, what most have not commented upon is that in the last four months of the year, according to the Wall Street Journal, (2) large caps were down 5.5%, midcaps were down 8.6% and small caps are down 16.4% going into the last trading week of the year.We’ve not yet seen the extension of this extrapolated line into the private markets but one must wonder how long the trickle-down effect will take. Smaller companies tend to do well at the beginning of an upturn and larger cap companies do better at the end.
- Debt is becoming a more attractive alternative for investors. This will be problematic to the sellers of businesses for various reasons. Most obviously, M&A buyers are large consumers of debt. They use it to buy companies. If they must pay more for their debt, they have less money left in their accounts to offer sellers. Less obviously but probably more significantly, the historically abysmal returns debt has offered for much of the last decade have led many typical debt investors, including insurance companies and pension funds, to provide equity to private equity funds. Flush with this extra cash, PE funds have been on a buying spree which is commonly stated to be the driving force behind today’s frothy valuations. As those investors shift back to the more normalized bond markets, private equity will have less energy and vigor for aggressive bidding.
- The financial press seems to be of the mind that the artificial boost to strategic buyers provided by the recent tax cuts has run its course. Is this a fair assessment or simply “Trump-bashing”? We have no idea but we all know that in the markets, sentiment is often more important than reality. Perhaps the fact that 2018 saw increasingly attractive results for sellers was a result of those tax cuts carrying the bull market on around for one last lap. Again, we are not talking certainties here, just indications and probabilities.
- The strong dollar has dampened the ability of foreign buyers to compete in the US markets.With yet another class of buyers lowering their activity levels, it may not be long before the laws of supply and demand kick in and the equilibrium point on the old supply and demand curves shifts down and to the left.
- China has largely gone home. As 2018 proceeded, the Chinese government tightened its grip on the export of capital. In the last half of 2018, the US government began to make Chinese investors feel unwelcome as well. Numerous high-profile deals were killed in a very visible fashion as a result of regulatory interference on both sides of the Pacific. These included, most notably, the purchase of Recurrent Energy Developments operations by Shenzhen Energy in August and then Broadcom’s acquisition of Qualcomm. According to CNN Money, Chinese investment in the US fell by 92% between the first half of 2018 and the first half of 2017 – 92% - and has been declining steadily since the second half of 2016.[1]Add to this the late 2018 US-China financial cold war and China’s slowly increasing realization that it has been splurging on debt that is now coming due and proving hard to pay down, and the spigot is now approaching the closed position.
- Forecasted growth of companies in the US public markets has taken a definite downturn. The S&P 500 saw collective growth of 7.3% in sales and 8.2% in profit year-over-year in the third quarter. The Wall Street Journal has been consistently predicting over the last three months that those same figures in a year will have fallen to 5.4% and 4.1% respectively.[1]While the private markets are not the public markets, both are selling that intangible asset known as future cash flows and if buyers feel the big companies can’t continue to deliver outsized returns, they are likely to share at least some of that sentiment when it comes to the private markets.
- Divided government might bring an end to the pro-business approach demonstrated over the last two years. The people that matter state that decreased regulation, lower taxes, and a more tolerant enforcement environment have benefited their businesses and increased the prices they are willing to pay for companies. But a period of more compromise is now inevitable and the uncertainty of the 2020 elections will likely only grow and bring with it a sense of increased risk that will affect valuations.
- All good things must come to an end. We have enjoyed a ten-year bull market in M&A, both private and public. That qualifies as “long in the tooth” to be as polite as possible. It seems that 4% GDP growth is not sustainable. Unemployment can’t go any lower. Further tax decreases seem unlikely. The federal deficit and debt are growing. Interest rates are not likely to drop. Confidence and sentiment could not be higher than they were three months ago and are in fact a bit lower now than they were then.
The good news is that we’ve seen absolutely no indication that the market for private companies has yet been affected by these indications. Furthermore, changes in valuation, whether favorable or unfavorable, have not historically occurred rapidly. If there is to be a drop in multiples, it will be perhaps not gradual but at least measured. That said, the probability we now face is that we are more likely than before to look back from a spot twelve months in the future and say “I remember when it, was the best time to sell.”
Author:
Clinton Johnston
Managing Director
Benchmark International
T: 1-813-898-2363
E: Johnston@benchmarkcorporate.com