Time to Act? Advisers tell clients to accelerate transaction timelines to take advantage of strong valuations

October 13, 2018 - MiBiz

Mergers and acquisition activity remained strong in West Michigan through the third quarter, as many sellers opted to go to market while they can still get a good price for their businesses.

Professionals in the M&A industry describe a clear seller’s market in which clients exiting their businesses often receive multiple offers from prospective buyers. Private equity firms and family offices remain active, competing hard for good deals, which is keeping valuation multiples up.

John Kerschen, president and managing partner of Charter Capital Partners, a Grand Rapids-based M&A firm that typically works in the lower middle market, attributes the private equity activity this year to the massive amount of “dry powder” in the U.S.

American private equity firms entered the year with a record $353 billion in dry powder, up 44 percent from 12 months earlier, according to an August report by the Washington, D.C.-based American Investment Council.

As private equity firms face deadlines to deploy their available capital, they’ve become increasingly active and competitive for deals, driving up multiples, Kerschen said.

“They have so much money and they have to get it deployed, so they’re willing to pay up,” he said. “There’s a sense of urgency to get transactions done.” more

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