This week’s M&A digest covers M&A activity for the first half of 2012, plus predictions for what we can expect. Also, we discuss how buyers think about companies and explain why customer concentration is not necessarily a good thing for companies looking to sell. Click on the headlines to read the articles in their entirety.
M&A Activity – First Half of 2012
“As many of you may be aware, deal making during the first half of 2012 was slower than anticipated. A variety of reasons contributed to this including tepid economic growth, bad employment data, and general fear of the unknowns facing the world’s economy right now. How much bad news can we hear weekly about Europe and its debt problems before it impacts our collective economic confidence?
It has long been said that two issues drive investors: fear and greed. Through the first half of 2012, fear was doing more than greed. However, that is expected to change in the second half of 2012 as capital that has been sitting on the sidelines gets put to work and buyers become more active.”
Mergers and Acquisitions – Trends for 2012 and Beyond
“As with most sectors in the U.S., the first half of this year was slower than expected in the M&A industry…When this happens we often hear from business owners that they are going to wait until “things get better” before they decide to start the exit planning process for their businesses. The key issue to consider is that generally it takes 12-18 months to close a deal with an optimal buyer. This means that by the time you realize that “things have gotten better,” the timing of your exit may actually place outside of the prime window to do so…
The reality is most analysts expect the remainder of this year, 2013, and 2014 to be prime for finding buyers.”
Thinking Like a Buyer – Avoiding Customer Concentration
“One of the most important issues you will face when you begin the process of finding a buyer for your company is shifting your mindset to think like a buyer in regards to your business. If you are like most entrepreneurs we meet, chances are good that you are an expert at operating your company.
However, most of you have never acquired another company. Because of this, you most likely will approach the sale of your company from your way of thinking, which is the mindset of a seller not a buyer. Keep one of Peter Drucker’s most popular business axioms in mind: ‘The buyer rarely buys what the seller thinks he’s selling.’“
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