No one can doubt the turbulence endured in the transactions market over the last 18 months.
Equally no one will need any reminding of those challenges and as we all surface, this blog takes a moment to consider what we’ve experienced.
So, do we still reside, here in Great Britain, in a world leading market for small to mid-market deals?
In our experience the answer is an emphatic YES … we’re still Great!!
We are blessed with so many world class businesses, be they privately owned (our market primarily), PE backed or listed.
And those enviable characteristics remain absolutely in demand. The world outside of our shores admire and many times marvel at the know-how and entrepreneurial spirit.
Our Owners, Entrepreneurs and Management Teams have responded with determination and a fighting spirit that is undeniable.
Where is the M&A drive coming from?
Europe and North America dominate; acquirers admire our skills and deep technical knowledge.
Here in the Midlands, we possess many engineering, manufacturing, infrastructure, construction, logistics and professional services businesses, who find themselves significantly valuable to overseas buyers.
Those values have also jumped as acquirers look to accelerate their own recovery, calling on their own cash reserves alongside the mountains of debt/investment cash that is available.
This is just the sort of news we would want to hear … strong valuations and investment appetite to follow on.
What has happened to deal volumes so far in 2021?
Well, they haven’t slowed down, that’s for sure.
There has been a total of just over 3,600 M&A deals in the 8 months to August 2021, compared to just over 2,200 in the same period of 2020 – that’s over a 60% increase!
Data for August 2021 alone shows there was a 37% increase in deal volumes on the same month in 2020.
And valuation multiples remain strong with 2021 year-to-date data showing these to be in the range of 10 – 13 times EV/EBITDA.
All in all, very positive noises and just what we’ve been experiencing with many of our clients.
So, should we be lifting our heads up?
Again, emphatically YES, put to one side for a moment the likely CGT challenge and think about where the best home for your business to flourish is. Might that be through a sale?
If it is, resist the rhetoric around auction processes as the only way to sell your business.
Think about your own journey and who would be best to help your company to secure a world class future.
Wouldn’t you really want to get to know your buyer and be working with them to ensure all your value is maximised whilst the business thrives.
What not to do
Don’t jump in … think first. Are we ready?
Sounds too simple … believe me many opportunities that are brought to market are not prepared and most certainly not ready to be tipped upside down through the process of sale.
All acquirers play safe and will employ an army of professionals (who never sleep in their virtual world) … the questions never seem to stop, and you need to be ready.
The last thing you want is to take your eye off your business and to run the risk of a blip … those professionals will jump on it and play God.
What to do
Keep in mind that you’re a precious commodity and you deserve the best rewards and future for all stakeholders.
Get someone onside that shares the same desires and has the scars … they’ll help you show that we really are a Great Britain.