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You are here: Home / M&A / M&A Weekly Digest – September 2nd, 2011

M&A Weekly Digest – September 2nd, 2011

September 2, 2011 By Lindsey Perkins Wade

This week’s M&A Weekly Digest includes stories about the expectation that 55% of the U.S. economy being healthcare-driven soon, things that shouldn’t affect business owners’ exit strategies, M&A activity remaining strong in Canada and the hot M&A sector of staffing. 

M&A Activity To Rise in Healthcare Segment As 55% of U.S. Economy To Be Healthcare-Driven

This article in the August issue of Medical Dealer magazine indicates that 55 percent of the U.S. economy is going to be healthcare-driven in the near future. That large percentage combined with the healthcare industry reaching maturity will result in increased M&A activity because the quickest way for companies to grow is to acquire another business rather than start from scratch.

Because of his expertise in mergers and acquisitions, Generational Equity’s Terry Mackin was interviewed by Medical Dealer’s Matthew Skoufalos for the piece. Terry points out the role that emotions play in determining the success of a deal and highlights the importance of the sales team.

Letting Wall Street Activity Change Your Exit Strategy? Big Mistake

Since capital gains tax and interest rates affect M&A activity much more than the stock market, letting market swings affect your exit strategy is a big mistake.

“[V]ery rarely has the stock market predicted a recession…according to Fortune, ‘there have been 30 market declines of 15% or more since the Great Depression, and only two led to recessions‘ (emphasis added).”

Why the S&P Downgrade Shouldn’t Affect Your Exit Strategy

“The M&A Advisor, a publication that focuses on M&A activity in the middle market, conducted a survey of leading dealmakers in the middle-market. Their conclusion mirrors ours: The S&P downgrade will have an impact on the overall financial industry in the U.S. However, because deals that close in the lower-middle market have less debt, the impact will be minimal. And again, there are other fundamentals that are driving M&A activity right now.”

The article then goes on to cite the fundamentals that drive M&A activity: strategic buyers are sitting on an estimated $1 trillion in cash, large amount of private equity overhang, low interest rates, and low capital gains taxes.

M&A Activity Remains Strong in Canada

A U.K.-based private equity group recently announced the acquisition of five companies in Canada, showing confidence in future growth of the Canadian economy as well as the five acquired companies.

“With Canadian M&A activity accelerating at a dramatic pace – in 2010 M&A activity was up 30% over 2009, reaching a five-year high – your middle-market firm could be extremely valuable to buyers right now. Nova is just one example of an extremely active equity firm looking for Canadian deals right now.”

Staffing – A Hot M&A Sector

“’The global staffing sector has seen a pickup in takeover activity in recent months as companies look to speed up growth by expanding into new geographies and niche businesses.’ Based on recent data, it appears that staffing companies are buying up smaller firms in a wide variety of markets across the United States.

According to Al De Bellas, president of staffing investment banking firm De Bellas & Co, ‘Despite negative economic news, both financial and strategic buyers continue to actively seek acquisitions.'”

© 2011 Generational Equity, LLC All Rights Reserved

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Filed Under: M&A, M&A Weekly Digest Tagged With: Canada, Exit Strategy, healthcare, s&p

About Lindsey Perkins Wade

Lindsey Perkins Wade is managing editor of The Private Business Owner.

The Private Business Owner – A Generational Equity Blog

The Private Business Owner is an online publication sponsored by Generational Equity. PBO aims to provide useful tips and information that will improve both the lives and businesses of entrepreneurs, as well as provide valuable insight into the company exit process through bi-weekly M&A Digests.
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