Tag Archive: M&A

M&A is on the Rise

July 28th, 2016

supply chain

A few weeks ago, I attended a ProVisors ODAM (Ontario-region based distributors and manufacturers group ­— don’t you love the name?!) session on the current state of the M&A market in Southern California — and specifically in the Inland Empire for manufacturers and distributors. The bottom line is that it remains a good time for M&A.

However, what I see frequently is business owners who think about M&A “too late” — if you want to sell for top dollar, you must start strategizing YEARS in advance. It can make a significant difference to the multiple of EBITDA (earnings before interest, taxes and depreciation) or revenue earned. For example, in the first quarter of 2016, the low multiple for EBITDA was 9.6 and the high end was 11.0. If you have even just a few million in EBITDA, this difference is interesting. And, this doesn’t get into the fact that if you have the right advisors and are proactively thinking about these concepts, you can significantly raise the multiple over the top end. There are countless examples.

Even if you don’t plan to sell, shouldn’t you be interested in increasing the value of your business for an ESOP (employee stock ownership plan), to recognize your top talent and to reinvest in business growth? There is something to be said for acting as though you will sell no matter your plans. When I was VP of Operations, we went through a preparation for sale process, and it was invaluable in understanding the business and profit drivers — something we should have dug into regardless of any potential sale!

One tip to implement this week:

So, I bet you are wondering what could possibly be done with M&A in a week. You wouldn’t be alone; however, you have to start sometime.  Why not this week?  If you are a business owner or executive of a privately held company, think about your long-term plans — what do you want to do with the business eventually?  Or what can you do to help realize these plans? I’m sure there are countless activities. Pick one that you think is particularly important and start there. Gather your team and talk about it.

If you are in a public company, the key is to think about stock value. Almost all of the same initiatives are important to increasing the value of your stock. Pick one and start.

If you are not in a leadership position, don’t despair. Do you know what the plans are within your organization? If not, find out. Ask questions. Find out how you can contribute. If you are in the loop, find a way that you can contribute to increasing the value of the company and start doing it. Run it by your manager if you need resources and to keep him/her in the loop. But, who is going to stop you from increasing value? To increase value, you have to provide better service, discover new markets, increase profitability, find ways to automate, etc. Aren’t they all “no-brainers”?

Looking for more ideas to keep your supply chain connected? Access more tips and resources on my blog. And keep connected by subscribing to my newsletter and email feed of “I’ve Been Thinking…”

Plenty of cash but no deals!

December 13th, 2012

Volatility is the new norm. In today’s new normal, global uncertainty is here to stay. For example, according to the M&A Advisor Market Monitor, M&A remains at 50% of pre-recession levels. With plenty of cash on the sidelines, this statistic is noteworthy. How is this same concept affecting your business?

Executives are still concerned about making decisions with minimal knowledge of what will occur tomorrow – what will happen to their key customers? How about core suppliers? Will cash reserves have to be used? Will talent be available?

With this level of volatility and complexity, talent is essential. Who else will innovate and find answers to these puzzles to achieve their strategy? Thus, those executives who prioritize finding and retaining top talent will thrive. What is your strategy and plan to succeed?

© Lisa Anderson 2012. All rights reserved

M&A – Organic growth in 2011

January 16th, 2011

I recently read an interesting article about M&A in the M&A Advisor. In 2010, there was a 22.9% increase in M&A activity over 2009. Emerging markets accounted for 33% of the increase. The energy and power sectors led all industry sectors with 20.6% of deal transactions of the total volume.

According to Roger Aguinaldo in “Predictions: What’s Ahead in M&A for 2011”: Expect organic growth to continue in 2011. Long-term growth still yields the best shot at higher valuations over time. This of course is achieved through the entrepreneurial mindset, global market expansion and technological and service innovations. No matter the financing challenges – and believe me, there are a lot of them — a good company and business model (revenue and profitability) is still the best opportunity for prosperity.

Thriving in 2011’s will require thriving in the new normal – driving revenue and profitability. I’ve written articles on thriving in the new normal for more details – click here for “Thrive in 2010’s New Normal Business Environment” and click here for my Industry Week article, “How to Thrive in 2010’s New Normal Business Operations Enivonment”. And if you are in the midst of M&A, here’s an article on integrating successfully – click here for “Merger & Acquisition: Integration Key to Success”.