2017 has been a banner year for the M&A market. Due to a strong seller’s market, increased fundraising for private equity firms and favorable economic conditions contributed to record-setting deal activity. Ryan Binkley has been very aware of this bullish market in his role as President and CEO of Generational Equity. And he, along with many other prominent dealmakers and analysts, are confident that 2018 will continue this trend.
While the final numbers for 2017 won’t be collected until the New Year, projections suggest US M&A activity will surpass $1 trillion for the fourth consecutive year. For Generational Equity, the past 12 months certainly followed this pattern, leading to many achievements including:
- Closing their 600th deal in June
- Being ranked second for deals closed up to $50 million by Thomson Reuters
- Winning Investment Banking Firm of the Year for the second year running at The M&A Advisor Awards
These accomplishments have pushed Generational Equity on course to close a record number of yearly deals in 2017, and edging closer to $4 billion in wealth generated for clients. These figures mean a great deal to Ryan Binkley, who is delighted at the strides Generational Equity has taken in the past year and the optimal deals the firm’s dealmakers have supported for both business owners and professional buyers.
But, after such a positive year, can the M&A market remain as strong as we prepare to enter 2018? For Ryan Binkley, the answer is yes.
2018 M&A Market Predictions
There are many positive indicators for the national and international M&A markets for next year. The Intralinks Deal Flow Predictor has always been a valuable tool in determining what to expect for the coming months, and it is predicting that the number of deals will increase globally by 2% YOY. In fact, they believe that Q1 2018 could exceed last year’s total by as much as 7%.
However, the North American sector is expected to experience a slight fall in deals completed (11%). But Ryan Binkley feels this shouldn’t be viewed as an omen for things to come. Firstly, Q1 2017 saw an exceptionally high number of deals concluded for this quarter generally. In addition, the conditions that benefitted the market in 2017 will still be active in the following year:
“Supportive financial conditions, a booming US equity market, and strong business and consumer confidence are all contributing to the current buoyant NA M&A market.” (Philip Whitchelo, VP of Strategy & Product Marketing, Intralinks)
More positivity is echoed by Robert W. Baird, who sees three main reasons why 2018 will be another great year for the M&A industry:
- Private equity growth – the number of private-equity-backed companies has grown by 30% between 2011 and 2017, and these firms are sitting on a record-breaking amount of dry powder
- International interest – Baird believes there will be strong interest from overseas in US businesses, especially from China
- Competition – with the helpful lending conditions and money available to buyers, competition to find the best options will be stiff, driving up business valuations and encouraging more owners to exit their company
This confidence is present throughout the M&A market, including the middle market. This area is of particular interest to Ryan Binkley and his team at Generational Equity, as it is the area the firm specializes in. Chicago-based law firm Dykema’s annual M&A survey stated that with more private businesses expected to enter the market, seven out of ten people are confident of more deals concluding worth $50 million and under.
Dykema places a significant emphasis on baby boomer business owners as the catalyst for continued success, something that Ryan Binkley has discussed in a previous blog post. This growth in activity from aging business owners, plus a growing anxiety of “missing the boat” while the going is good, is expected to preserve the strength of the market well into 2018.
This analysis by Danielle Fugazy paints an effective picture for what many dealmakers are expecting for 2018:
“Industry professionals far and wide are saying the same thing: This bull market can’t last forever. On the other hand, they aren’t pointing to any particular clouds on the horizon either.”
“But private equity firms have more capital than ever and macro-economic conditions remain strong, pointing to another robust year for the industry.”
So, to sum up, Ryan Binkley and Generational Equity are optimistic for the continued strength of the M&A market as we approach 2018. Ryan is confident that the firm can continue to build on the past year’s success and help more business owners devise the optimal exit strategy.
The time for entrepreneurs to take advantage of these promising conditions has been extended, but it will not last forever. Ryan’s advice: if you’ve been thinking about exiting your business, now could be the ideal time to achieve the optimal valuation from interested buyers.