The Trump Effect On 2017 Mergers & Acquisition – A Double-Edged Sword?

manufacturing m&a
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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.


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.

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