As we catch up on last week’s M&A articles, this week’s digest covers pieces about the stock market’s relationship with M&A, economic news, how interest rates affect exit planning, the amount of cash on corporate balance sheets, and where private equity firms prefer to focus.
Stock Market Driving M&A
“As you all are probably aware by now, the stock market is doing very well this year. In fact, last month the DOW beat its 2007 high water mark, surpassing 14,200. This is good news for any business owner contemplating the sale of a business since history has shown that M&A (mergers and acquisitions) tends to follow stock market activity and growth. In fact, according to an article in the Wall Street Journal (WSJ) last month, analysts are expecting 2013 to be one of the strongest in years for mergers and acquisitions.”
Economic News – Recovery More Robust Than Expected
“Last week we finally got some good economic news about our ongoing recovery. As you are probably well aware, post-recession the U.S. economic expansion has hardly been dynamic. In fact, a better term to use would be ‘tepid’ at best. This has impacted all facets of our national psyche as unemployment has remained stubbornly high for the past four years.
But last week, despite fears of the impact of sequestration, it appears that the recovery has picked up steam.”
Interest Rates and Exit Planning
Carl Doerksen reviews the important effect that interest rates have on exit planning and what the current state means for business owners.
Cash on Corporate Balance Sheets – What’s the Plan?
“The title of the article said it all: ‘Buffett Scolds CEOs for NOT Deploying Stockpiles of Cash.’ I generally find that anytime Warren Buffett pontificates on topics like this, he hits the proverbial nail on the head.
He does so this time as well regarding cash on corporate balance sheets.”
Private Equity’s Real Sweet Spot
“One topic that always catches our eye is the typical size deal that equity firms focus on. We see this time and time again from every source that compiles deal data: Equity firms have a significant focus on lower middle-market sized companies.“
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