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The Blog of The M&A Marketplace by cHc

Why Private Equity feels now is the Time to SELL

Huxley Nixon - Thursday, July 24, 2014

This Fortune article (June 5, 2014) by Laura Lorenzetti explains why PEG’s are heading for the exits in 2014.  PEG’s cashed in for $17.4 BN in Q1, up 100% from the same period earlier and the best IPO start in 14 years. Companies are divesting their holdings this year because……..Read More

DISCLAIMER:  Opinions and conclusions in this post are solely those of the author unless otherwise indicated.  This article is for general information purposes and is not intended to be and should not be taken as advice on any particular matter nor is it intended to be a solicitation regarding any securities transaction and or investment relationship.  For those desiring additional information please visit our website www.mamarketplace.com.

 

Middle Market M&A 2014 - Key Drivers

Huxley Nixon - Tuesday, May 20, 2014

Excellent analysis by Jeff Golman, financial markets contributor to Forbes, about how middle market M&A performed in 2012 and 2013 and where it is headed in 2014.  He is bullish on 2014 being a strong market because six favorable factors continuing to drive the market. Several are:

  1. Favorable Credit Markets and lending environment – higher leverage levels
  2. Historically Low Interest Rates
  3. Large and increasing corporate cash and finite-lived private equity reserves
  4. ….Click Here to see more

 

 

DISCLAIMER:  Opinions and conclusions in this post are solely those of the author unless otherwise indicated.  This article is for general information purposes and is not intended to be and should not be taken as advice on any particular matter nor is it intended to be a solicitation regarding any securities transaction and or investment relationship.  For those desiring additional information please visit our website www.mamarketplace.com.

 

NEW IRS de minimis SAFE HARBOR Capitalization rules - do You Qualify?

Huxley Nixon - Tuesday, December 10, 2013

Is Your Company set to take advantage of the NEW IRS de minimis SAFE HARBOR Capitalization rules?

The just released (October 2013) IRS tangible property repair regulations spell out when a business must capitalize or can expense capital expenditures beginning in 2014 and beyond.  The catch that owners may not be aware of is that to qualify for this limited relief in the future they MUST have a written capitalization policy in place by December 31, 2013! CRI CPA’s/Advisors have summarized the new rule for large and small businesses.  See the specific Safe Harbor limits discussed in their just released newsletter - read more……

DISCLAIMER:  Opinions and conclusions in this post are solely those of the author unless otherwise indicated.  This article is for general information purposes and is not intended to be and should not be taken as advice on any particular matter nor is it intended to be a solicitation regarding any securities transaction and or investment relationship.  For those desiring additional information please visit our website www.mamarketplace.com.

When Growth DECREASES Your Comany Value

Huxley Nixon - Friday, October 25, 2013

Excellent article in Inc Magazine by John Warrillow, a friend and frequently quoted business writer, about the dangers of growing the top revenue line versus focusing on those things that add real value to your company.  While John's audience is typically the owner of companies with less than $5 million in revenue, these principles apply equally to larger companies.

This is a MUST read for all business owners and those that advise them.  Click Here to read the Inc. article.

CONGRESS and President OBAMA - It's NOT about the ACA or the DEBT Ceiling!

Huxley Nixon - Wednesday, October 09, 2013

By Huxley Nixon

 

"Washington has been dancing around the elephant in the room for the past six years and it is NOT the Affordable Care Act!  It’s much BIGGER - a loss of ........"

This post focuses on WHY we MUST focus on the real problem facing the US.  If we fail to address it NOW our fragile economy will most likely slip into another Recession.  The author looks at the role of demographics, marriage rate, poverty rate and the Labor Force Participation Rates and their impact on the growth trajectory of the US DEBT as a percent of GDP.  You will have a clear picture of WHY Mr. Bernanke has waffled on "taking his foot off of the Accelerator" when Unemployment has almost reached his goal of 7% (August 2013 - rate was 7.3%).  The REAL rate today is .....

Is there HOPE? Read More....

Healthcare IT M&A Activity for H1 2013

Huxley Nixon - Tuesday, July 23, 2013

MedicExchange.com just posted Berkery Noyes' report on middle market M&A activity on those IT companies serving the pharmaceutical, healthcare payer and healthcare provider segments.  Compared to H2 2012 median valuations held steady around a 10X multiple of EBITDA but deal volume was down 16%.  Total transaction value was up 58% to $8.03 billion but only because of the acquisition of Springer Science & Business Media by BC Partners for $4.42 billion.  If this deal is removed from the mix - transaction value was DOWN 29%.

Healthcare IT remained the most active in this segment and those companies that facilitate healthcare information sharing and interoperability received the most attention from buyers. Jeffery Smith of Berkery Noyes said "Large vendors are taking steps to stay ahead of the technology curve" by targeting..........Read More.

PVT Equity M&A Deal Activity Drops Dramatically Q2 2013

Huxley Nixon - Thursday, July 18, 2013

PitchBook just released its report on Middle Market M&A activity by Private Equity for the First Half of 2013 – it was a BIG surprise to many.  Most market watchers were expecting a pickup in deal activity in Q2 after a drop off in Q1 from the spike in tax motivated transactions in late 2012. Investors were sitting on unprecedented amounts of dry powder that started expiring in 2013, large numbers of portfolio companies were still held after five+ years, easy access to debt at very low rates was available, all pointed to a pickup in deal activity.   This did NOT happen - Q2 was the slowest since Q2 2009!  Click here to see full report.

The US stock markets are at all time HIGH’s, unemployment is below 8%, interest rates are at historical lows and consumer confidence is at 57%, the highest since 2007.  Even the housing market is coming back with new construction activity up for the first time since the great recession.  This fragile recovery is being buoyed by the Fed’s policy of Quantitative Easing pumping $85 BN monthly into the US economy.  Everyone knows the stimulus will come to an end and we have already seen the impact of Chairman Bernanke’s June 20th comment about the Fed “taking its foot off the accelerator” in late 2013 or the first half of 2014 if unemployment declines to 7% – the Dow lost over 550 points in two trading sessions.  Last week he made another announcement that he will keep the pedal to the metal for as long as it takes – the markets are at NEW all time HIGH’s.

“Uncertainty” kills markets and consumer confidence (consumer spending drives our GDP) and the author feels this is the reason for this BIG surprise in deal activity slowing down.  Volatility in the markets will be the norm going forward as long as clouds of uncertainty remain on the horizon.  Our largest trading partner, Europe, is in recession, US 1st Half 2013 GDP forecasts have been revised downward to below 1%, Geo-political Risk is spreading across the Middle East with Syria in a civil war and Egypt potentially headed in this direction, the first successful terrorist attack on US soil since 911 occurred in Boston, an exploding national debt with Washington unable to address the tough choices ahead, and more government regulations imposed on US businesses (the Affordable Health Care Act takes full effect in 2014) do not make for a high degree of confidence in strong GDP growth in the future.

The author does not know what will happen going forward but business owners considering a sale of part or all of their company in the next five years may want to act sooner than later.  At least an owner should consider hedging their bet by taking some of their chips off the table today.  In five years there will be less money available for acquisitions by financial buyers (fewer buyers), the number of “boomer” business owners selling will add potentially hundreds of thousands of new deals to the market when interest rates are rising, and inflation possibly once again is a concern.  This is not what I would call a “Sellers Market”.

DISCLAIMER:  Opinions and conclusions in this post are solely those of the author unless otherwise indicated.  This article is for general information purposes and is not intended to be and should not be taken as advice on any particular matter nor is it intended to be a solicitation regarding any securities transaction and or investment relationship.  For those desiring additional information please visit our website www.mamarketplace.com.

Summary of NEW TAX rate changes for 2013

Huxley Nixon - Thursday, April 11, 2013

Moore Colson, an Atlanta based accounting firm serving private Middle Market companies has developed a one page summary of the new tax rates created by the Fiscal Cliff compromise in January.  This is a handy reference guide of the new tax changes that effect owners (both personally and corporately) who are considering a sale.  Click here to download summary.

 

DISCLAIMER:  Opinions and conclusions in this post are solely those of the author unless otherwise indicated.  This article is for general information purposes and is not intended to be and should not be taken as advice on any particular matter nor is it intended to be a solicitation regarding any securities transaction and or investment relationship.  For those desiring additional information please visit our website www.mamarketplace.com.

Constuction Spending Stumbles in January But Residential Picking up Steam

Huxley Nixon - Monday, April 08, 2013


After nine consecutive months of increases the US Census Bureau reported total new construction spending was down in January 2.1% to $883.8 BN.  On a positive note, New Residential spending was UP 3.2% in January after an increase of 1.4% in December and was up 31.7% from January 2012.  Non- residential construction, heavy-engineering (bridges and roads) construction spending was down dramatically in January but still reported a modest single digit year over year increase.  Chief US Economist for Reed Construction Data, Bernard Markstein, addresses the major risks that could reverse this positive trend.  They are……….(read more)

JOBS ACT Update

Huxley Nixon - Thursday, July 12, 2012

Chris Manderson, Esq., writer for PEHub who has actively followed the JOBS Act is an excellent resource for current information if this topic is of interest. He reports the SEC misses rule making deadline, but "the Wheels Are in Motion" according to SEC Chair Mary Shapiro.  She recently told Congress it was "not feasible" to meet the JOBS Act's 90-day deadline for the implementation of changes to Securities Act Rule 506 to permit general solicitation in private placements to accredited investors.   

Crowdfunding

On this key component of the Act to make it easier for early stage companies to get funding "Schapiro had little to say about the JOBS Act’s creation of a new exemption from registration under Section 5 of the Securities Act...... She noted that the SEC has 270 days under the JOBS Act to implement the new crowdfunding exemption."

According to Manderson, "Schapiro in the past has revealed skepticism about crowdfunding, stating that it would weaken investor protection and be “a step backwards,” so it is not surprising that her testimony hinted at significant..."  Read more…

 

DISCLAIMER:  Opinions and conclusions in this post are solely those of the author unless otherwise indicated.  This article is for general information purposes and is not intended to be and should not be taken as advice on any particular matter nor is it intended to be a solicitation regarding any securities transaction and or investment relationship.  For those desiring additional information please visit our website www.mamarketplace.com.



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