All signs are pointing to a continuation of the M&A rebound we saw in the second half of 2020 – great news for any business owner who is thinking about selling their business in the coming year!
Here are just a few of the headlines and predictions we came across recently about the outlook for M&A in 2021:
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“M&A outlook shows ‘surprising level of optimism’ for 2021” ~MiBiz
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“The M&A recovery that began in the second half of 2020 will accelerate in 2021, as corporate and private investors have access to capital and can pursue deals to build scale and expand scope.” ~PWC
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“2021 could be a banner year for M&A activity, and one in which the seller of a strong, healthy middle-market business could actually fare very well.” ~Forbes
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“Overall… advantageous interest rates and the increased availability of capital are set to increase M&A activity in 2021 – even if dealmakers travel less, and continue to work remotely. Ultimately, dealmakers that remain ‘deal ready’ will be best positioned to reap rewards in 2021.” ~Datasite
So the question is: Why aren’t you planning for your exit?
“68% of owners don’t have a comprehensive transition plan even though 75%-95% of their net worth is tied up in their businesses,” according to a recent report from Ready for Next Cities.
The report goes on to say that the US government and other organizations have consistently estimated that 70%-80% of small and medium sized operating businesses will fail to transition to a successor owner. The Family Firm Institute found an even higher failure-to-transition rate (88%) among family-owned businesses.
These failure rates are not only abysmal, they are downright frightening, and can largely be attributed to a lack of planning on the part of owners. Not having a transition plan can cause numerous problems for a business and its owners. It leaves those involved in the company vulnerable, including family, employees, customers, and the larger community.
According to the report, owners cite several reasons for why they don’t plan for their business exit. Here are a few:
- Too little time – We get it… you’re busy running your business. Planning your exit has taken the back burner because you're consumed with the day-to-day operations of the business.
- Emotion – The prospect of not being an owner can be a difficult thing to grapple with since you’ve spent so much of your life tied to the business. It’s part of your very identity – who you are.
- Too early to worry about it – You’re used to taking chances as an owner, and this is just one more. Maybe you think time is on your side and it will work itself out somehow.
- No support – Maybe you don’t know where to go or who to ask for help. Perhaps you’re not sure where to access the education and high-value resources you need to move forward with your exit.
- Friend had a bad experience – It’s common to measure our own situations against our friends or colleagues.
- Too overwhelming/fear of the unknown – Planning does take effort and time and it may seem like there is no clear path to success.
Do any of these resonate with you?
If so, join us for our free webinar on January 6 at noon EST, Plan Your Deal of a Lifetime in 2021, and learn how to dramatically improve your chances for achieving all of your goals.
Wed, Jan 6, 2021
12:00 PM - 1:00 PM ET
We will also discuss our new EXPERT Mastermind Group that will launch in early February. Participants will learn best practices from our work with more than 100 owners.
You will also learn from your peers – other owners who are also planning their business exits. We will guide you through your own exit planning process, answer all of your questions, and keep you on track.
We invite you to schedule a free consultation call to kick start your exit planning process. Schedule your call today!
