After a somewhat choppy 2017, many experts are calling for a busy 2018 in the M&A space. The Intralinks Deal Flow Predictor Report suggests that the pace of M&A activity will increase in 2018, based in large part on “a combination of gradual acceleration in global economic growth, low inflation in advanced and emerging economies, buoyant asset markets and low-interest rates that continue to bolster the M&A markets.” While there are concerns that could impact the potential increase in deal flow (such as a rise in economic protectionism or a global equity sell-off) the prevailing view is that the positive conditions for M&A activity will continue to rule the day and drive increasing dealmaking.
Deloitte’s “The State of the Deal-M&A Trends 2018” report takes a similar view. The Deloitte report, based on a survey of business executives, notes that a significant majority of respondents expect M&A deal flow to increase over the next 12 months, while deal size is expected to increase as well. The Deloitte report cites acquiring technology, expanding customer base in existing markets and expanding/diversifying products and services as the leading drivers for M&A deals. Among other positive factors, the Deloitte report notes that cash reserves are up significantly at potential acquirers, and that the primary intended use of that cash is for acquisitions.
Family-owned businesses should see an uptick in M&A interest as we move into 2018.
Buyers are always on the watch for well-run businesses with quality earnings and customer bases. Family-owned businesses that are looking to grow should see an opportunity to acquire other businesses. Those businesses that want to take advantage of a favorable market should start to take steps now to prepare, by working with management and advisors to get the business “in shape” for a transaction. Several upcoming posts on this blog will discuss specific items that come up in almost every deal and steps business owners can take to prepare for a sale, such as dealing with financial statements, contracts management and HR/ERISA issues.