1st Quarter 2017
At Premier Sales, Inc., we are engaged in on-going discussions with business investors and Arizona business owners spanning a wide range of industries. These conversations provide an interesting backdrop for understanding what is happening in today's market.
Political Landscape Change
With Trump winning the White House, we saw a significant shift in people’s perception of future economic growth/business growth. Prior to the election, business planning sessions focused on tax strategy, accumulation of cash reserve, conservation of dollars, and limitations on expansion. Post-election, business owners are far more optimistic about the future. Less regulation, lower taxes and government spending on infrastructure and defense has created a buzz – euphoria in the business arena. Business owners and investors are projecting growth and improved earnings.
The stock market continues to run at an all-time high. In January 2017, the Dow Jones industrial average hit 20,000 and has since broke 21,000. The “market correction” did not occur in 2016 as anticipated. Yet, our opinion remains that a correction will occur as interest rates are expected to increase.
So why is this relevant? We are seeing a lot more money coming into the Mid-Market and Privately Held Company space. Corporations are actively seeking acquisitions. Mid-Market Companies are acquiring their competitors. High net worth private investors are seeking to acquire good businesses. Private Equity Groups (PEGs) have lowered their minimum deal size threshold. See Completed Transactions under the Experience tab
Demographic Shifts – Exit Planning
Everyone knows that the Baby Boomers are aging into retirement at a considerable rate (10,000 boomers turn 65 each day). However, have you put this into context? Baby Boomers were the most prolific creators of businesses in our nation’s history. Yet, when it’s time to transition out of the business owner seat, who will fill that seat? With Generation X and Y being smaller population groups, it will be the Millennials, a population group that is larger than the Baby Boomers. And, yes, this is the most educated generation (34% with college degrees) in our history. It is also a generation:
- graduating from college with an unprecedented high level of student debt (exceeding $1 trillion);
- having fewer to become independent renters or heads of households;
- heavily valuing lifestyle and recreation time;
- viewing homeownership as less important than the freedom to pick up and go
So why is this relevant? Ask yourself this question, “Does the psychographic profile described above match up to what it takes to be successful in the business owner seat that I occupy now?” We believe that the prospects for finding a buyer or someone to take over the business are significantly reduced in the future as the demand for these prospects increases dramatically. Business Owners who are planning their Exit will be able to exit on their terms when they are ready. See Transactions Briefs.
What is the Opportunity for You and Your Business?
Privately held businesses that meet the PEGs acquisition requirements are positioned to capitalize on a liquidity event – in other words, sell your business on favorable price and terms. For privately held businesses that do not meet the PEGs requirements, the business may meet the requirements of a strategic buyers looking for growth and market share.
As a business owner, the time in NOW. Planning your exit is critical. The best plans take between 3 and 5 years to execute. It’s like investing money. The more time we have, the better the results. See How to Extract Business Wealth.
Premier Sales offers Business Exit Planning and Business Succession/Continuity Services. Call our office or click here to learn more about our services
. We are committed to your success.