Improved Outlook Seen in Middle-Market Mergers
The market for Mergers & Acquisitions (M&A) is clearly improving in valuations, financing availability, and deal volume and will continue to do so throughout 2012 according to a survey conducted by MBA students and Professor Kevin J. Mulvaney at Babson College in collaboration with members of The Association for Corporate Growth and Exit Planning Exchange.
Looming clouds on the horizon may include variations in the capital gains rate, estate changes, and uncertainty about economic growth and the effect of world events on the global economy. This is the fourth year of the Babson survey which has delivered “extremely accurate” projections in its previous years said Mulvaney.
Findings That Impact Business Owners The environment for exit continues to improve. Valuations are rising and are projected to continue to rise. The market to sell a business or restructure capital is very good. Key is getting the company’s revenue growth and EBITDA (earnings before interest, taxes, depreciation, and amortization) to acceptable standards vs. the industry average and the expectations of the buyer.
Findings That Impact M&A Professionals Volume continues to increase moderately and the largest concentration of activity is in service industries. A rollup strategy is sought in many service industries and service company owners are looking to combine or sell due to the challenge of rebuilding revenue bases in an industry sector that is in transformation.
Babson College MBA students, Babson Professor Kevin J. Mulvaney, and the Association for Corporate Growth and Exit Planning Exchange surveyed and conducted interviews with more than 200 leading national professionals involved in middle-market M&As.