Current trends in the market related to business valuations, owner succession, and merger and acquisition activities.
For many the economy is not as bad as it is being projected by the media. Companies doing maintenance, medical services, security based government contractors, utility type services, and technologies that provide cost savings etc. are humming along. Some companies in more stressed sectors have made the adjustment and cut costs in line with the new reality of reduced revenues.
Banks are engaging in their usual game. Having granted too much credit over the past five years they are now granting too little. In their defense I am glad I don’t have to underwrite credit risk as it seems like fortune telling to me.
Forward looking people, (like the recent Forbes Index findings) think that we are at bottom and that by the 2nd half of this year things will slowly be improving. The emphasis unfortunately is on slowly.
What Does This Mean?
Transactions are occurring in sectors with steady revenues at decent multiples so long as sellers maintain flexibility. We are working with a medical device company and finding plenty of interest.
Buying opportunities abound in those sectors of the economy that are more cyclical. It may be a little early to jump although it is clearly time to start looking.
If you own a highly leveraged, or even a reasonably leveraged company - look out if you need a new loan or to renew an existing loan or line of credit. Bank policy is being driven by a fear of short term losses. Get close to your banker, be responsive and communicate often. If you sense you are in trouble with the bank shop alternatives early. Several companies we work with are changing lenders.
It is a great time to transfer your business to your children. We are preparing the valuations on several right now and the projected tax savings are substantial.
It is a great time to begin planning or implementing exit strategies. One example is that owners with substantial companies should be looking at two step transitions to take advantage of lower values to lower estate taxes in a family transfer now followed by a planned market sale when there are higher values in the future. Finally, while the rules are uncertain and it may be too late, there may still be time to discount minority interests in family businesses.
In summary, while many businesses will continue to struggle there are opportunities available from business mergers and acquisitions, succession planning, and other prudent business strategies.
For many the economy is not as bad as it is being projected by the media. Companies doing maintenance, medical services, security based government contractors, utility type services, and technologies that provide cost savings etc. are humming along. Some companies in more stressed sectors have made the adjustment and cut costs in line with the new reality of reduced revenues.
Banks are engaging in their usual game. Having granted too much credit over the past five years they are now granting too little. In their defense I am glad I don’t have to underwrite credit risk as it seems like fortune telling to me.
Forward looking people, (like the recent Forbes Index findings) think that we are at bottom and that by the 2nd half of this year things will slowly be improving. The emphasis unfortunately is on slowly.
What Does This Mean?
Transactions are occurring in sectors with steady revenues at decent multiples so long as sellers maintain flexibility. We are working with a medical device company and finding plenty of interest.
Buying opportunities abound in those sectors of the economy that are more cyclical. It may be a little early to jump although it is clearly time to start looking.
If you own a highly leveraged, or even a reasonably leveraged company - look out if you need a new loan or to renew an existing loan or line of credit. Bank policy is being driven by a fear of short term losses. Get close to your banker, be responsive and communicate often. If you sense you are in trouble with the bank shop alternatives early. Several companies we work with are changing lenders.
It is a great time to transfer your business to your children. We are preparing the valuations on several right now and the projected tax savings are substantial.
It is a great time to begin planning or implementing exit strategies. One example is that owners with substantial companies should be looking at two step transitions to take advantage of lower values to lower estate taxes in a family transfer now followed by a planned market sale when there are higher values in the future. Finally, while the rules are uncertain and it may be too late, there may still be time to discount minority interests in family businesses.
In summary, while many businesses will continue to struggle there are opportunities available from business mergers and acquisitions, succession planning, and other prudent business strategies.
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