M&A Outlook 2022

What a year (or two) it has been. We’ve had pandemic shutdowns, labor shortages, supply chain bottlenecks, lots of government support and believe it or not a lot of M&A transactions have been completed this year. In fact, 2021 will be the largest year for M&A on record…that’s right the biggest year ever!

While past is not prologue, if you think 2022 may be the year for you to sell your business here are 3 factors we see impacting M&A next year:

Capital is Plentiful

Business owners that are considering selling their business are always wise to pay attention to who is buying and why. Larger companies (strategic acquirers) are flush with cash and looking for opportunities to continue to grow by adding new products or services, pursuing new markets and geographic expansion, or adding customers to whom they can cross-sell and upsell. During the 2020 downturn these businesses pulled back from M&A but came back strong this year and are expected to continue to seek more acquisitions during 2022.

In addition, private equity firms are flush with cash. They have had record fundraising and strong exits from previous investments and are now looking to redeploy that capital with new companies.

Be Ready

This year Destined has engaged in selling businesses to both strategic acquirers and private equity firms. Some were already clients that had taken the time to prepare for the eventuality that someone might come knocking on their door. In these instances, we were able to secure significant valuation premiums because they knew what to expect and had all their ducks in a row.

Time to De-Risk

With all the ups and downs you face running a business many owners are just tired of carrying the burden alone. Some clients have opted to sell their entire company to move on to the next chapter of their lives.

Also, several clients have sold a majority of their company (70%-80%) to secure financial peace of mind while now having someone to share the responsibility for the financial well-being of their business. These owners still have energy and passion to put toward their business, yet they wanted to reduce their risk by spreading their wealth to assets other than their business. We can show you how this works and why it may make sense for you to consider such a transaction.

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When to Start the Process

Well, it’s never too soon. Often business owners come to us when they have received an unsolicited offer. Or, if your business is ready to be sold today you will want to: know how to engage the right prospective buyers; best practices to negotiate the price (valuation) and terms; completing the exhilarating process known as due diligence; and planning for the closing and post-transaction integration.

For those of you who prefer to take a longer-term approach, take time to review your exit options including the pros and cons of each transaction type, create a road map to get your house in order to ensure you can breeze through due diligence and plan for your financial future outside of the business.

Destined can help you manage your journey no matter which course you choose. If you are ready to sell your business during 2022 or want to plan for a transaction in the near future contact us today.

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