The M&A market continues to be strong in 2022, but recession headwinds could slow its momentum. Companies must consider all available data to position themselves as attractive targets since M&A opportunities are closing.
“SMBs have an opportunity to take advantage of this record-setting M&A market,” says Seth Morgan, MLA Companies Founder and CEO. “At MLA, we provide the data analysis and expertise to help business owners navigate the best course.”
One of the most significant challenges small- to medium-sized businesses face when preparing to sell their business is positioning their financials for maximum value. Strong financials will always be the foundation of a successful sale, but other data is also coming into consideration.
The M&A market is changing. While traditionally, creating a confidential information memorandum (CIM) was enough to take a business to market, today’s investors look past the CIM into financials and operations data.
“At MLA, we’ve seen small- to medium-sized businesses struggling to sell,” Morgan states. “Their CIM was in place, but they weren’t able to deliver the cohesive view of operations with financial data that would capture investors’ interest.”
With their clients, MLA advises to let the CIM be the launching pad for building data in operations which will create a path to future profitability. This operations data is a key factor in a company getting sold.
Larger corporations need to integrate operations data immediately. If small- to medium-sized businesses cannot connect operations to profit, regardless of what value they seem to offer financially, they may not be an attractive acquisitions target.
The window of opportunity may be closing for businesses looking to sell and cash in on the abundant M&A funds. A Bloomberg survey of economists placed the median probability of a recession over the next 12 months at 47.5%, an increase from the 30% probability predicted in June.
MLA understand the importance of getting an M&A process started before these financial headwinds make M&A too costly in the future.
Thinking of selling your business? Contact us to learn how we can help.