A recent article from Business Insider highlights four trends that will have increasing effects on middle market transactions in the next couple of years. The authors predict a more active M&A market and higher deal flow as a result of these trends.
The first is Inventory. Recent surveys indicate that retirement is a top reason for business owners to sell. With baby boomers now reaching their mid-sixties, we can expect exit strategies to become a new priority. In addition, private equity firms who have been riding out the recession will be looking to leverage unused capital.
Second is quality. The article notes that according to World Economic Forum, the best-managed ownership group are those backed by private equity. In addition, many companies are operating more efficiently as a result of the recession.
The third trend is a loosening of credit markets. Debt is continuing to become more available to the middle market and this trend shows a vast improvement over the past year.
Fourth, a continued development and use of technology in M&A is likely to have an impact on the middle market. With nearly 400,000 companies in America’s middle market, M&A experts and business owners have begun to adopt technology to market, prospect and build a pipeline of potential transactions. Cloud-based solutions have assisted organizations in streamlining and increasing efficiency in this area.
The full article from Business Insider is available here.