The conditions in the local mergers and acquisitions market are ripe for business owners to sell, according to industry experts.
“There’s a shortage of high quality sellers relative to buyers,” said John Beagle, managing director and co-founder at Grace Matthews Inc. in Milwaukee. “Private equity buyers have a ton of cash and need to put it to work and the big strategic buyers, their balance sheets are stronger than they’ve been in years.”
Public companies are also facing pressure to grow in a low growth world, so they are making acquisitions, he said.
M&A activity started out slow this year, but both Beagle and Vicki Fox, managing director at Eisen Fox & Company LLC in Milwaukee, expect it to pick up in the second half of the year.
“If you’re a good quality company, there’s a ton of buyers out there that are eagerly looking for deals,” Fox said.
The demand for the few quality sellers coming to market has pushed multiples higher, said Bryan Browning, managing director at Valuation Research Corporation in Milwaukee.
There’s also plenty of money on the sidelines for good quality firms, which has made for easier financing on deals, he said.
“Money’s cheap, it’s the cheapest it’s ever been,” Browning said. “Banks are trying to be competitive and trying to lend money.”
Ann Hanna, managing director at Schenck SC in Milwaukee, has also seen valuations rising and bank deals improving.
“We’re starting to see better structure with the deals,” she said. “We’re starting to see better terms from the banks.”
It’s a perfect storm for business owners considering an exit. Read more in “Now may be the time to cash in your chips” in the new issue of BizTimes Milwaukee.