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manufacturing m&a

Trump Effect

As an M&A professional selling exclusively in the manufacturing sectors, a look at the “Trump Effect” on 2017 mergers & acquisitions is of vital importance. We know that manufacturing is one of the most regulated industries in the country. In fact, the National Association of Manufacturers reports that manufacturers pay $19,564 per employee to comply with federal regulations. This is double the per-employee cost of all firms in the USA as a whole.

With President-Elect Trump vowing to “drain the swamp,” and dramatically ease regulations on small business, manufacturers are more positive than they’ve been in some time. NAM’s Manufacturing Outlook Report showed that optimism among manufacturers is at a 2 year high, with 77.8% of respondents being positive or very positive about the outlook for their companies. It’s not just manufacturers who are feeling good about the 2017 outlook. Consumer confidence soared to levels not seen since August 2001.

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2016 Ends With 2 Months Of Stronger Orders

All indications are that 2017 will be a banner year for manufacturing. Regional Federal Reserve Banks are reporting expanding manufacturing activity in December for the second straight month on stronger new orders, shipments and production data. The manufacturing sectors continue to be the most sought after acquisition in the lower middle market because the ROI is usually higher than in other sectors of the economy.

What Happens If Interest Rates Rise?

However, will the “Trump Effect” be a double-edged sword? Interest rates ticked up in December with the Fed indicating three more increases during the course of 2017. Every time rates rise, the cost of buying a business increases. The higher the rates, the fewer business buyers can afford. It appears that the Trump Effect on manufacturing will be mostly positive.

However, part of “draining the swamp” will likely include a return to an economy that is not artificially propped up with low rates. If you’re a manufacturing business owner who has been considering retirement, there may never be a better time than early 2017 to start the process. Consumers are feeling positive, rates are still low and banks are lending. It’s the perfect time to exit. Is it the right time for YOU to sell your manufacturing business? We can help you figure it out, contact us to learn more.

About Frances Brunelle

Frances Brunelle is the founder of Accelerated Manufacturing Brokers, Inc., which specializes in the sale of lower middle-market manufacturing companies nationally. Fran and her team help to ensure the continuity of U.S. Manufacturing by transitioning ownership to the next generation of entrepreneurs. Recently Fran was named to 2020 Most Influential Women in Mid-Market M&A (Mergers & Acquisitions). Fran will also be the host of WAM (Women and Manufacturing) podcast, a Jacket Media production. Fran writes on topics that help manufacturing business owners prepare their companies for sale and navigate the sale process to ensure a positive financial result in support of their retirement.

4 Comments

  1. Richard Morgan CMC, FIMC on January 16, 2017 at 9:58 pm

    Even after multiple partial point interest rate increases, overall borrowing costs will remain historically low during 2017. The Trump effect will be a major plus for manufacturing and small business as a whole during the next 24 months…starting on January 20, 2017!

    • Frances Brunelle on January 16, 2017 at 10:36 pm

      Hi Richard, Thanks for taking the time to read and comment. I agree with you – The Trump Effect on manufacturing in 2017 and beyond should be awesome! I know that’s what our clients and customers are hoping for.

      I hope 2017 is successful for you and your business.

      Best regards,

      Fran

  2. Donald J Glidewell, CPA on January 17, 2017 at 9:14 am

    I echo the sentiment the positives of reduced regulation will more than out weigh the interest hikes. Looking forward to an exciting year in 2017! Good article, thanks for sharing the insight!

    • Frances Brunelle on January 17, 2017 at 10:46 pm

      Thanks Donald,

      I hope you’re right! Thanks for reading and taking the time to comment.

      Best wishes for continued success in 2017.

      Fran

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