This week’s M&A Weekly Digest discusses why private equity firms focus on the lower middle-market, how similar businesses can have different valuations, and the options that the Ansoff Matrix suggests for growing your business. Click on the headlines to read the full articles.
“Another source has confirmed what we have said before: Private equity firms love to invest in lower middle-market companies…[F]or the first five-plus months this year, lower middle-market companies (Preqin defines this as being companies valued below $250 million) have accounted for 80% of all deals closed by equity firms. This is the highest mark during the period shown since 2009.”
“[W]hy do two companies in the same industry with similar projected growth opportunities and profitability often have widely divergent valuations?
The answer is simple: One company is more “saleable” than the other. Another term we use for this is being “buyer ready.” Company A and Company B could have similar post-recasting financials and perhaps even the same growth opportunities. However, Company A has been built from day one with the end game in mind: to be properly positioned so that buyers perceive it as more attractive than Company B.”
Get your creative juices flowing with “the Ansoff Matrix. Created by the father of strategic management philosophies and mathematician, Igor Ansoff, it was first published in the Harvard Business Review in 1957. Even though the matrix is now more than 50 years old, it still applies to business management today.”
© 2012 Generational Equity, LLC All Rights Reserved