Deloitte: Opportunity Knocking for Midmarket Firms in M&A

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Oct 20, 2014, 08:50 ET

NEW YORK, Oct. 20, 2014 /PRNewswire/ -- Nearly half of respondents (43.8 percent) describe the M&A market for mid-sized, privately-held companies as "improving" or "very aggressive" in the next 12 months, according to a recent Deloitte poll. Even more (46.4 percent) feel confident their companies are prepared to entertain an offer immediately from a hypothetical "perfect buyer."

"As company valuations, share prices and cash-on-hand liquidity are generally on an upswing, many sellers have more options today than in the past five years to extract value from their companies — sometimes without selling outright," said Phil Colaco, managing director, Deloitte Corporate Finance LLC (DCF). "Some mid-market business owners are leveraging debt recapitalization to pay dividends that buy out minority shareholders. Others are recapitalizing to extract capital without giving up total control or ownership."

Although the current M&A market is providing opportunities for many owners of midmarket firms to finance investments or extract capital, the opportunity does not come without risk.

"Thoughtful planning is crucial to a successful transaction," said Kevan Flanigan, national managing director, Deloitte Corporate Finance LLC. "Don't try to time the market too closely or put too great a focus on driving value for the transaction at the expense of current operations and strategy. Focus your efforts on: retaining advisors; evaluating management succession plans; assessing tax, personal and business implications of potential liquidity alternatives; and, identifying potential value-erosion areas before negotiations commence. You created a business plan to start your business — don't forget to create one to sell it."

DCF works heavily in the mid-market space, helping entrepreneurs to grow or sell their businesses and helping larger companies, private equity funds and other investors to help smaller companies grow. During its most recent fiscal quarter, DCF advised on 17 mid-market transactions.

About the online poll
More than 1,400 professionals responded to polling questions during a July 30, 2014 webcast, titled "Moving On Up Now – Practical Steps for Preparing To Sell Your Business." Respondents work in a range of sectors including banking and securities, technology, investment management, retail & distribution and real estate services. Click here to listen to the webcast.

About Deloitte Corporate Finance LLC
Deloitte Corporate Finance LLC, an SEC registered broker-dealer and member of FINRA, is an indirect wholly-owned subsidiary of Deloitte Financial Advisory Services LLP and affiliate of Deloitte Transactions and Business Analytics LLP. Deloitte Corporate Finance LLC provides deal execution and lead financial advisory services to large corporate, middle market, and private equity firms. Deloitte Corporate Finance LLC has access to the resources of the Corporate Finance Advisory practices of the member firms (and their affiliates) within the Deloitte Touche Tohmatsu Limited network of member firms. Together with Deloitte Corporate Finance LLC, these practices include in excess of 1,900 professionals, working collaboratively in 150 international locations. Investment banking products and services within the United States are offered exclusively through Deloitte Corporate Finance LLC. For more information, visit www.investmentbanking.deloitte.com. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

Contact

Shelley Pfaendler

Public Relations

Deloitte

+1 212 492 4484

[email protected]

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SOURCE Deloitte