M&A demand for middle market businesses will remain strong in 2021!
This is how Dykema/ACG summed up their findings:
Reflecting strong U.S. M&A activity in the first quarter of 2021, respondents to the Dykema and Association for Corporate Growth-Detroit’s Spring 2021 M&A Flash Survey overwhelmingly expressed optimism for U.S. M&A activity in 2021, with more than 70% expecting the U.S. M&A market to strengthen in 2021 compared to 2020.
Five key items were expected to fuel this growth:
NDAs (non-disclosure agreements) and LOIs (letters of intent) are both key documents that are signed at critical stages of the acquisition process. Generally, NDAs are initial indications of interest by a buyer signed to protect the confidentiality of the seller; LOIs are created before due diligence and are a good indication that a deal will most likely close in 60-90 days.
Each of these alone would signify a dramatic year for us and, more importantly, for our clients. Collectively, to have so many key categories increasing simultaneously (and in significant fashion) is indicative of just how much pent-up demand is out there among professional buyers for middle market companies.
But according to the Dykema/ACG survey:
One potential dark cloud looms large over U.S. M&A activity according to our survey respondents – potential tax increases in the U.S. Two of the top three threats to U.S. M&A in 2021 that our respondents are worried about relate to increased tax rates, at both the corporate and individual levels.
This issue is critical to you as you consider your exit. It boils down to this:
How much cash do you want (need) to retain, after taxes, once you close a deal with a buyer for your business?
Given the complexity of this topic (and the critical importance it has to owners of privately held businesses), we strongly encourage you to meet with your tax and M&A professionals sooner rather than later.
Given the tax proposals already suggested by the Biden administration, it is safe to assume that corporate, individual, and capital gains taxes will potentially all increase after the current tax year ends. This is something that you seriously need to factor into your exit timing.
Thankfully, our clients have access to Generational Wealth Advisors, our wealth management team that works closely with our dealmakers to create wealth management plans long BEFORE a deal closes, enabling our dealmakers to negotiate the most advantageous tax reducing deal structures possible for our clients.
If you are interested in learning more about the current (and expanding) seller’s market, and how you can take advantage of it BEFORE proposed tax increases take effect, I would suggest that you reach out to us to attend a Generational Growth and Exit Planning Conference near you. Use the following links to learn more about how you can do this:
If you would like to see the entire results of the Dykema/ACG survey, you can download it using this link:
And special thanks to our friends with both Dykema and ACG for providing such a timely and thought-provoking survey!
Carl Doerksen is the Director of Corporate Development at Generational Equity.
© 2021 Generational Equity, LLC All Rights Reserved
The information we learn from customers helps us personalize and continually improve your experience. Here are the types of information we gather.
We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice.
Generational Wealth Advisors’ affiliates are all part of one corporate family, they work with one another and may work together to provide services to you. The sharing of your information among affiliates enables Generational Wealth Advisors to serve you more efficiently and makes it more convenient for you to do business with Generational Group. Generational Wealth Advisors is permitted by law to share information with its affiliates. All of our affiliates follow similar privacy policies.
For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Group may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Group. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Group at its office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Group may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Group does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Group will be deemed NOT to be confidential. By sending Generational Group any information or material, you grant Generational Group an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Group is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Our computer system protects personal information using advanced firewall technology.
Information Generational Group publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Group intends to announce such products, programs or services in your country. Consult a Generational Group representative for information regarding the products, programs and services which may be available to you.
Generational Group makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Group web site, please understand that it is independent from Generational Group, and that Generational Group has no control over the content on that web site. In addition, a link to a non-Generational Group web site does not mean that Generational Group endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, Trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Group BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Group.