What’s the Deal with M&A Flow?– August 12, 2013 by Jim Lisy

I can always tell when the deal market is out of balance — lots of calls from private equity (PE) folks looking for sellers and visits from those that “just happen to be in Cleveland” and want to drop by for a chat. PE funds have raised an enormous amount of money to buy companies, and they wish they were busier right now. In talking with a lot of the companies that might be candidates for sale, it’s clear to me that the case for selling right now isn't so compelling. For the most part, companies that survived the downturn are doing okay at the moment. One of my clients recently turned down an attractive offer because his company expects to double cash flow over the next couple of years. “Why sell now when there’s so much upside left?” he said.

While now is a good time to sell in that banks are lending and equity is available, for many potential sellers it “just doesn't feel right.” The fact is, the M&A market is never in balance; sellers that would get a lot of attention right now may not in a couple of years. For those that are thinking about selling at some point in the foreseeable future, remember, if it doesn't feel right then it’s probably not. But don't try to play the timing of the market — odds are you'll lose.

That aside, if an M&A transaction is somewhere on the horizon for you, begin preparing now, and, when it feels right you'll be good to go.

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