All businesses strive to grow, expand and gain a competitive advantage. While success can happen organically, Mergers and Acquisitions (M&A) drive the greatest growth among lower middle market companies.
Many times, it will be a turning point in a company’s life, such as the transfer of ownership of a family business. Other times, M&A are critical to a company’s growth strategy.
Buyers look to drive growth by acquiring market share, expanding geographic reach, increasing industry expertise or investing in capabilities, technology, talent and new assets. Seller rationale can be tied to wealth maximization or a need to monetize business, as well as the desire to sell off ancillary divisions to focus on core business units.
The intention is unique to every organization, but it is based on the idea of creating more value and synergy — which has become a commonplace strategy today.
Every year, almost a quarter of all middle market companies acquire all or part of a business and about one in twenty sell (or divest all or part of) their organizations. In total, M&A transactions make up more than US $3 trillion globally, and 2018 is poised for growth with new synergies and hundreds of billions in investment capital already earmarked for lower middle market companies.
Companies that will take advantage of M&A opportunities will turn to investment banks and M&A advisors to mitigate new layers of complexity inherent in today’s highly competitive landscape. The stakes are simply too great across all industries.