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The Role Of Timing In M&A Deals

Posted on February 22, 2023 By

Several important factors play into the deal-making process if you are a business owner considering a merger and acquisition for your lower- to middle-market company. Timing is often one of these factors.

The unfortunate truth is that 70% of M&A transactions fail. But this doesn’t have to be the case. Timing can make a major difference in the success of your potential deal. It could also result in you getting the highest company valuation for your business in a sale. But M&A deals are complicated and should not be viewed in such black-and-white terms.

So, when is the right time to sell your business? Does it even matter? It depends on how favorable the market conditions are and the level of private equity competition it brings to the table. But it also depends on what is happening in your business's sector. For example, conditions may be great for selling a technology business but may need to be better for a retail company. And it's about more than just the market conditions and economic situation. There are several factors that you should consider when it comes to pursuing an M&A deal.

Exit Planning

Formulating your plan for your retirement can be a significant factor in determining the timing of a potential merger or acquisition. It is common for business owners to have a major portion of their personal wealth tied up in their company. When you sell that business, it unlocks value and offers you liquidity. You may want to consider working with a financial advisor to figure out how much money you need to set aside for retirement as well as when the market conditions would be best to achieve the transaction outcome that will meet your retirement goals. When you know your number, it makes it easier to evaluate buyer offers to purchase your business. It is also important to consider how professional exit planning can help you form the best strategy for your future.

Ready to explore your exit and growth options?

Uncertainties and Volatilities

It’s no secret that supply chain disruption issues have made waves worldwide. While many of the pandemic-related supply problems have been resolved, there are still issues caused by Russia's invasion of Ukraine, ongoing lockdowns in China, and resulting inflation and higher interest rates. To address the problem, companies have been buying suppliers that are closer to home, especially in retail, so they can better control the speed and volume of the supply chain. But private equity is still sitting on plenty of dry powder, and they will not wait for the market to bottom out. If you have a thriving business with growth potential and limited risk conditions, the current market doesn’t matter all that much. Uncertainty in the market can create opportunities; at the same time, it presents challenges. It largely depends on your individual business circumstances and the sector you operate within. A long-term deal strategy that is aligned with strategic goals can emphasize the importance of M&A irrespective of the current market and short-term focus.

Stage of the Business

Smaller businesses have the potential to grow and scale into larger businesses with additional capital. This type of growth potential draws the interest of investors and private equity, making companies more attractive for sale. They want to put their money into a business that can grow their investment so they can cash out on it later (often called the “second bite of the apple”). So, if your business is poised for growth based on several factors, it may be the perfect time for you to capitalize on that position. If you wait until your business has already achieved that growth and then plateaued, you may not get as lucrative of a deal. And, if you are not quite ready to retire but are thinking about a deal in the next five to ten years, a private equity sale or partial sale could be right for you, helping you gain financial security now and earn from the growth of the company in
the future.

The bottom line is that while timing can play an important role, it isn’t the only factor that impacts a successful M&A transaction. Sometimes owners wait too long, hoping for the perfect opportunity, and end up completely missing out and losing significant value. An experienced M&A specialist can help guide you regarding activity in your sector and other investment trends to help you time your exit when the time is right for you.


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Benchmark International is a global M&A firm that provides business owners with creative, value-maximizing solutions for growing and exiting their businesses. Benchmark International has handled over $8.25 billion in transaction value across various industries from offices across the world. With decades of M&A experience, Benchmark International’s transaction teams have assisted business owners with achieving their objectives and ensuring the continued growth of their businesses. The firm has also been named the Investment Banking Firm of the Year by The M&A Advisor and the #1 Sell-side, Privately Owned M&A Advisor in the World by Pitchbook’s Global League Tables.





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