I just returned from CFA’s Summer Conference in Chicago. One of the highlights of the event was a panel of Private Equity experts talking truths about the state of the middle market M&A industry from their perspective….that of the financial buyer. In cutting to the chase…if you own a successful middle market business and you have a need to sell all or part of your business…now may just be the perfect time to go to market.
So what does that mean? Why is now a good time to sell? According to all our panelists (Gretchen Perkins of Huron Capital Partners, Michael Jordan of Bayside Capital, Maneesh Chawla of Prospect Partners and Jeff Walters of LaSalle Capital Group) the market for well-run middle market companies is extremely competitive right now. Private equity firms are in the business of putting their capital to work…they must invest existing funds before raising new capital. They are always in the market for well-run companies to add to their portfolios, either as add-on or platform investments. The challenging economic conditions of recent years have made sourcing those investments difficult to say the least. Many businesses, both private and public, took direct hits to their bottom line during the past few years and aren’t considered strong performers anymore. The current supply of strong performing businesses is low relative to what the market can support and as a result, this imbalance is driving prices higher.
Bottom line…if your company weathered the storm during the past few years and is still considered a best in class business… it may just be the perfect time to market it to financial buyers.