1/04/2017 by Greg Gush
Exciting Times. Changes. New Challenges. Growth Continues.
It’s the first week of the New Year, and an exciting year for sure with a new President and a new focus and team. The crystal ball, fortune-tellers, projection pundits, soothsayers, naysayers, and financial experts are having a field day. I can’t predict the future, but one thing is certain, change is likely.
As Merger & Acquisition Advisors working in the small to middle market, we work with and within that change. We work in the now and with the current set of events. Our focus is marketplace-based not theoretical. Whether you are in the market for acquisitions, mergers or divestitures, we can help.
As you saw from our site and recent posts, we first recommend our Market-based Opinion of Value on your business. We look at what is listed and selling today and their multiples. Then we mutually build a top down go-to-market strategy. At that point you will have taken the first step in preparing for the year(s) ahead.
Our go-to-market strategy is proactive. We list too. Proactively, we select one or all of the target market channels, whether equity funds, strategic companies or industry competitors, we compile the list, prioritize them, and then contact all of them on your behalf.
Why am I sharing this? Because there are indications 2017 will be a strong year for small and middle market Mergers and Acquisitions. Small businesses are a great buy now. They are finally coming through the recession, after surviving the crash. The survivors are well run and now operate from a solid base, posed for the next big upside. They are priced for today and give the acquirer a bright economic upside of growth. It’s often said that buying right is more important than selling. And timing is very important.
A well run profitable small company can offer leading returns, 15% to 20% Adjusted EBITDAs. Compare that to the past 10 years of average market returns from leading Stock ETFs: 7.23% per year for Total Stock Market; 7.11% per year for Large Cap Stocks; 7.66% for Mid Cap; and 8.22% for Small Cap. That’s healthy, but 15% to 20% Adjusted EBITDAs represents 2x to 3x the stock market averages. Now, further consider what that means to an owner’s return, if the entire economy faces 5 years of solid growth.
Gregory S. Gush
Licensed Investment Banker & Business Broker
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