M&A Source Conference Report from October, 2017
Last week in Las Vegas I was able to attend the 50th M&A Source conference. The M&A Source has now been in existence for 25 years and each year it has two conferences; an east coast conference and a west coast conference.
The M&A Source is one of the six associations I am a member. The purpose of the M&A Source is to keep its members at the forefront of what’s happening in the lower middle market or where deal size transactions are between $2 million and $100 million. The conference includes many Private Equity Groups, Mergers and Acquisition service providers such as lenders, attorneys, CPAs as well as many M&A intermediaries.
There were many presentations and discussions at the M&A Source conference but here is a summary, by bullet point, of the different news or points of interest that most attendees agreed about.
- The US Congress is discussing the pivotal issue of tax reform which is being presented as critical to the future of the GOP. If the GOP are unable to pass any legislation, then the political repercussions for the party could be very long term.
- One of the presenters at the conference was Monty Walker. Monty has previously testified before the US Congress about taxes and their impact on privately held businesses. By training and career, Monty is a CPA and he sees there is little agreement in the congress about what laws could and should be changed. For the tax laws to be effective from the beginning of 2018, any laws will need to be passed by Thanksgiving or in less than 4 weeks.
- M&A deal flow inquiries are at an all-time high. However, the actual closings of transactions are not. The consensus is that there is plenty of money to invest in M&A transactions, but buyers are very selective about any final purchase decisions.
- We are now approaching 10 years since the 2008 Great Financial Recession. There are mixed opinions about whether the economy is heading for a correction or whether it will remain business as usual. This is probably a good sign. If everyone was positive, as they were in 2006 and 2007, we know how that worked out in second half of 2008.
- The wild card is the national and international economies and, what’s happening in China. China is already starting to place controls in place to restrict the amount of capital that can move out of China. With most central banks, especially the US Federal Reserve no longer pumping money into the economy but also raising interest rates, this will provide a new dynamic that many, especially the Millennials and younger, have not experienced before.
The main take-away form the M&A Source conference was that the good times are not yet over, but the time is right to be a little more cautious.
For those Baby Boomers that wish to sell their business and move happily into retirement, the time to try and sell their business may now be the best it will be for a while. One of the concerns is that the ‘next generation’ of buyers may be in short supply meaning there may not be enough buyers for all the businesses coming onto the market. The main reason is that the ‘next generation’ saw how hard their Baby Boomer parents had to work and it’s not something they are willing to embrace.