Get current data behind why Manufacturing M&A Is Booming Heading into 2021 and why we're still in a seller's market.
National Data Confirms the Strength of Manufacturing M&A
Throughout 2020, we’ve been telling manufacturers that manufacturing M&A is booming and has not slowed down. Now, national third-party data supports what we’ve been telling potential clients since the beginning of the second quarter.
Manufacturing M&A is booming heading into 2021.
The Market Pulse Report, published by Pepperdine University, tracks M&A activity on a quarterly basis. The report included several interesting statistics as the third quarter of 2020 came to a close.
Highlights From the Q3 2020 Market Pulse Report
- Pandemic-resistant businesses are in high demand, with engineering and manufacturing outperforming every other sector.
- Completed transactions increased by 71% over Q2.
- Completed transactions increased by 43% compared with Q3 of the previous year.
- Median sale prices increased year over year.
- Larger businesses in the lower middle market are experiencing unprecedented buyer interest, with sale multiples increasing along with company size.
- Lower-middle-market companies in the $2 million to $50 million category sold for 100% of their list prices, while smaller companies averaged 90%.
- Buyers of lower-middle-market businesses are traveling more than 100 miles to complete acquisitions.
Manufacturing Companies Remain Highly Sought After
Many potential clients took a “wait and see” approach during the COVID-19 pandemic. They believed buyers pursuing acquisitions during this period would only be looking for bargains.
The Market Pulse Report confirms that engineering and manufacturing companies in the lower middle market are not only selling—they’re selling at strong prices and remain the most highly sought-after sectors.
Most Owners Wait Too Long to Begin Exit Planning
The report also showed that retirement continues to be the leading motivation for selling a business.
Unfortunately, 60% of owners in the $2 million to $5 million price category and 38% of owners in the $5 million to $50 million category completed little to no exit planning before selling.
Of the owners who did plan, most began less than one year before placing their businesses on the market.
A word of caution: Planning early helps sellers achieve better results.
Why Manufacturing Business Owners Should Act Now
Manufacturing M&A is booming heading into 2021, and we remain in a seller’s market. Sale multiples and pricing are strong.
Now is the time to act decisively while favorable tax laws remain in place.
You can learn more about how Biden’s tax plan could affect the sale of your manufacturing company here: How Biden’s Tax Plan Will Change the Sale of Your Manufacturing Company.
Are You Ready to Start the Process?
Connect with us here: Seller Registration.