Increased Value Multiples Forecast for 2013

Business publication MiBiz asked the region's top executives to contribute to their Crystal Ball 2013 special edition highlighting "insights, economic sentiment, and forward-looking strategies from the region's business leaders." When asked to provide his take on the M&A industry, here's how John Kerschen, Managing Director, The Charter Group, replied:

"For the first time since the onset of the Great Recession, our national economy enters a new year with faint tailwinds instead of dramatic headwinds. The unemployment rate is finally below 8 percent, interest rates remain at historic lows, and assuming a fiscal cliff can be avoided, general sentiment has improved from 24 months ago - resulting in a positive outlook for the M&A industry.

In the last five years, business owners have been reluctant to sell for a number of reasons, including a valuation gap between expectations and true market value, slow recovery of operating results coming out of the recession, perceived lack of attractive public market investment prospects for the proceeds from a sale and a challenging credit environment as banks recovered from their own issues.

Additionally, larger corporate or strategic buyers were exceedingly conservative as they cut costs in an effort to survive the recession. However, over the past 12 months, strategic buyers have emerged leaner and with ample capital for acquisitions to compete with already hyper-aggressive financial buyers (private equity groups).

Today and for 2013, the result is a robust and seller-friendly market for well-performing businesses. As owners increasingly feel more comfortable about their businesses, we believe there will be a release of the pent-up supply of attractive and marketable businesses. Combined with the current high availability of cheap capital and high quantum of financial buyers, (that) should result in significantly increased deal flow and value multiples in 2013."

See the complete MiBiz Crystal Ball 2013 special edition at What keeps you up at night? Looking ahead to 2013.

For nearly 25 years, The Charter Group has helped business owners optimize ROI throughout a business's most important transitions, from inception through growth and eventual sale. A leading M&A advisor, we specialize in transactions ranging from $10 million to $100 million. Whether you're ready to buy, grow, or sell your business, The Charter Group will skillfully guide you to what's next.