Analysts who track the M&A market are forecasting a sizable uptick in deal activity, both in the number of deals and the size of the transactions. According to the Q4 2017 Market Pulse Report, a publication of the Pepperdine Graziadio Business School, the middle and upper markets tanked at the close of 2017 due to uncertainty of tax reform. However, lower middle market deals were at an all-time high. This trend is expected to continue during the course of 2018. Here are some other interesting insights from the report:
- Manufacturing accounted for the largest percentage of M&A transactions at 23%.
- Engineering/Construction acquisitions came in second at 15% of overall transactions.
- Existing companies accounted for 40% of the acquisitions with individual buyers a close second at 38%. This is a change from prior reports where individual buyers were dominating. Clearly tax reform has made an impact on companies’ acquisition spending.
- Multiples for lower middle market companies rose in the 4th Read about it in Nicole’s article!
- Realized price vs. asking price jumped to 94% on deals between $2-$5 million and 101% on deals over $5 million.
- The average time to close deals is 8.7 months.
At Accelerated Manufacturing Brokers, Inc. the market conditions are better than we’ve seen in 25 years. Prices are up and the sale cycle is shorter. There continues to be more qualified buyers than quality manufacturing businesses on the market which equates to a Seller’s Market. With the shorter sale cycle, you could start 2019 as a new retiree.
If you’d like to receive regular information about current market conditions for lower middle market manufacturing M&A, visit our contact page and sign up for the 2018 Manufacturing M&A Report.