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The
Mergers & Acquisitions (M & A) market place is continuing
its presence as US businesses continue to reshape themselves
to better compete in today's challenging market.
Today,
business owners are confronted with the costs associated
by means of advancing technology, increased foreign and
domestic competition, and higher customer demands for
quality and value to name a few. These challenges leave
a business owner with a few options that characteristically
include major capital infusion, selling, or the consideration
of a Merger & Acquisition.
The M & A oftentimes
gives buyers the way to build their competitive strategy.
Due to its nature, most M & A transactions typically occur
in the middle market. On the sell side, middle market
business owners are seeking to escape the rigors of running
a company today. On the buy side, corporations view mid
sized companies as an opportunity to gain important synergies
without "betting the company" on any one acquisition.
The middle market offers efficient opportunities for growth,
while minimizing the risk of entering new markets as well
as the expense associated with start ups. Consequently,
corporate buyers, CEO's and board members view M & A's
as an important expansion technique.
Corporate
buyers are particularly motivated by strategic acquisitions
of close-fitting, synergistic companies. These deals are
designed to increase market share by complementing their
areas of concentration, fill voids in the acquiring company's
product line, reduce the actual cost of goods, market
share, geographical expansion, control distribution channels,
or capitalize on the benefits of shared technologies or
vertical integration.
The factors that drive
the increase in business sales today are: a global marketplace,
advancing technology, and consolidating industries. In
addition, buyers are optimistic about the economy regardless
of consumer confidence, foreign buyers are playing a major
role, and financing availability and conditions remain
favorable.
To
these factors we add the fact that foreign buyers continue
to influx the US as they are attracted by both a need
for global presence and a more stable economy.
As a result of
corporate cutbacks of the ranks of middle and upper managers,
the pool of quality owners/operators looking to acquire
a business has expanded. Often, upper management are relieved
with handsome severance packages that allows them the
opportunity to integrate into a growing company, bringing
forth the necessary expertise M & A's seek as well as
a personal investment.
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