M&A Market Showing Significant Strength – Finally!

Although the environment for selling a privately held business has been extremely challenging since late 2008, increased activity and the interest garnered by IBG's clients over the last 12 months, indicates to us that the market is recovering. The market for selling a business is substantially better today than it was in 2009 and early 2010.

Pitchbook, an independent research firm, recently presented their M&A market assessment based on data compiled through the end of the first quarter of 2011. The following is a summary of their findings:

  1. The amount of capital invested in 2010 deals versus 2009 increased by more than 250%. This data confirms what IBG has been seeing from buyers: a strong interest to invest capital in order to take advantage of a recovering economy.
  2. The amount of capital invested in the first quarter of 2011 was up by more than 55% in contrast to the first quarter of 2010. This indicates to IBG that the resurgence in M&A is strongly moving forward in 2011.
  3. Midwest firms garnered the largest percentage of total M&A deals at 24%. Deals in the South accounted for 17% of all transactions, while the West Coast was responsible for 15%. The M&A market is showing strength in most geographic areas throughout the country, which is very encouraging.
  4. The percentage of deals for lower middle-market companies is at the highest level Pitchbook has seen in the last 7 years. This finding also matches what we are seeing at IBG: more firms with more money are acquiring small and mid-size firms as part of their overall strategy.

If you have been waiting for the market to recover before considering the sale of your business, these findings are a positive signal for you. We all know it is better to take advantage of a new growth cycle rather than try to catch the tail-end of it. The Pitchbook data indicates that we are in the midst of a positive market change after two long, difficult years.