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Value-Enhancing Strategies For Business Owners

Posted by Carl Doerksen on May 27, 2016 at 8:30 AM

One of the most important concepts that business owners need to consider is employing value-enhancing strategies for their business, even if the timing of the owner’s exit may be years away. Sometimes your strategies for expanding your business may run counter to steps that actually improve its valuation to buyers.

The reality is this: From the day you open the doors of your business, you should be focusing on ways to improve its value from the perspective of a buyer, as well as remove issues that could negatively impact its sale-ability. Both are two sides of the same coin, and a very important coin indeed.

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Topics: enhancing value, valuation, evaluation

Private Equity Firms and Strategic Growth – Add-Ons Make Sense!

Posted by Carl Doerksen on May 25, 2016 at 8:30 AM

As we have discussed, one of the most popular methods for private equity (PE) growth is via an add-on strategy. Add-ons (a.k.a. bolt-ons) are relatively smaller companies that equity firms invest in and then “bolt on” to an existing platform company.

Usually the initial investment by an equity firm into an industry is a fairly large transaction – often companies with revenue in excess of $50 million or earnings of $10 million plus. After the platform or portfolio company is acquired, PE firms then do extensive research, looking for synergistic additions to that platform. Synergies can be either vertical or horizontal and are often both.

Some recent examples of add-on acquisitions in action include the following:

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Topics: add-on company, private equity firms

M&A to Surge in 2016?

Posted by Carl Doerksen on May 23, 2016 at 8:30 AM

Recently Platinum Equity Principal Soo Jin Goh was a guest on CNBC’s International Capital Connection. He made interesting points regarding trends in M&A activity he expects to see in 2016.

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M&A Activity in 2016 – The Buyer’s Perspective

Posted by Carl Doerksen on May 20, 2016 at 8:30 AM

After a record-setting 2015 in terms of M&A activity in the U.S., the million-dollar question is what will 2016 end up looking like? So far this year, even though the stock market in January did affect investors’ outlooks on M&A investing, and although 2016 may not be a record year, it is shaping up, at least for Generational Equity, to be another stellar year. In fact, we have nearly the same number of dual signed letters of intent right now than we did at the same point last year (a dual signed LOI is a good indication that the deal will close).

But what about the bigger picture? How about M&A activity in the country as a whole?

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Topics: buyers, m&a activity

Generational Equity Wins International M&A Award

Posted by Carl Doerksen on May 18, 2016 at 8:30 AM

Being humble folks, we tend to avoid bragging in this blog. However, The M&A Advisor recently recognized our work on Stern Rubber, a transaction that closed last October.

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Topics: generational equity, selling a business, selling your business

Chinese Firms On U.S. Buying Spree

Posted by Carl Doerksen on May 16, 2016 at 8:30 AM

Businesses located in China have become extremely acquisitive of U.S.-based businesses, according to a recent article in the Los Angeles Times. This is how the reporters described the situation last year:

Chinese investments in U.S. businesses hit a record $15 billion last year, with California remaining a top destination, but the money increasingly is being spread throughout the nation as investors expand their spending into hospitality, auto parts and other industries.

According to analysts, their acquisition activity is being driven by a number of factors and did not end or abate on December 31 of last year.

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Topics: offshoring, international buyers & investors

The Seller’s Market Continues

Posted by Carl Doerksen on May 13, 2016 at 8:30 AM

The title of the piece on PitchBook.com caught my eye because it summarizes what we have been saying for months: “In PE Dealmaking, Sellers Remain in The Driver's Seat.”

For the uninitiated, “PE” is short for private equity, and the PitchBook headline implies that sellers currently have tremendous leverage with buyers because the amount of dry powder or “overhang” continues to grow, especially in the PE world.

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Topics: private equity overhang, private equity firms, sellers market, private equity dry powder

Smaller Private Equity Funds' Popularity & What This Means For Business Owners

Posted by Carl Doerksen on May 11, 2016 at 8:30 AM

Generally speaking, the size of a fund raised by a private equity (PE) firm relates to the size of the general transactions the firm plans to make. Typically, smaller funds invest in smaller deals.

Recent data from PitchBook, a leading PE research firm, caught my attention because it showed that smaller funds have become a major component of the PE marketplace.

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Topics: selling a business, private equity firms, exit planning

Private Equity and Committed Capital – The Overhang Grows

Posted by Carl Doerksen on May 9, 2016 at 8:30 AM

A few weeks ago, PitchBook, a leading research organization focusing on the ongoing analysis of the venture capital (VC) and private equity (PE) industries, released its latest update on how much capital PE firms have at their disposal via commitments from their limited partners.

Even after a record M&A year in 2015, the PE “overhang,” or “dry powder,” continued to grow in 2015. You can see this clearly in the following PitchBook chart:

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Topics: selling a business, private equity overhang, private equity firms, sellers market, private equity dry powder

2016 Fed Rate Increases and Their Impact on M&A

Posted by Carl Doerksen on May 6, 2016 at 8:30 AM

 

The question on every M&A professional’s mind so far this year is when (and how much) will the Fed increase their short-term interest rates? Also, what impact, if any, will an increase have on the activity of buyers?

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Topics: interest rates, sellers market

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