Global mergers and acquisitions (M&A) set records in 2021 with a $5.9 trillion total deal market value, exceeding previous highs by $1.3 trillion.1 2022 is on target to be the second-best year on record due to attractive valuation levels, tax considerations, and the need for innovation and technological growth. Even as some financial headwinds emerge, robust fundamentals remain for M&A opportunities for now.2 However, for businesses looking to sell and cash in on the abundant M&A funds, the window of opportunity may be closing.
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.3 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.4 MLA Companies is helping businesses overcome this and other M&A hurdles with a unique approach that goes beyond outsourced CFO or financial advisory services to offer their clients strategic advisory, financial forecasting, and meaningful organizational insights to fuel business growth.
President and CEO of MLA Companies, Seth Morgan, says, “For a successful M&A cycle, our team looks for holes in the data and precisely identifies the downstream decisions impacted by that gap.” AI and machine learning are still fairly new in the marketplace, and small- to medium-sized businesses are often priced out of the most innovative software solutions. They have significant and specialized knowledge and experience but lack the business systems to generate useful data and deliver intelligent feedback.
The M&A market is also 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. MLA Companies saw small- to medium-sized businesses struggling to sell. Their CIM was in place, but they weren’t able to deliver a cohesive view of operations with financial data that would capture investors’ interest.
With their clients, MLA advises letting the CIM be the launching pad for building data in operations which will create a path to future profitability, a key factor in a company getting sold. Larger corporations, in particular, 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 are not an attractive acquisition target.
The M&A market is strong at the moment, but in the next 12-18 months, there may be another shift that makes it harder for businesses to find buyers. Small- to medium-sized businesses who want to sell, need the operational data to satisfy buyers before it’s too late.
Morgan says, “SMBs have an opportunity to take advantage of this record-setting M&A market. At MLA, we provide the data analysis and expertise to help business owners navigate the best course.”
About MLA Companies
MLA Companies is not a CPA firm that also does consulting. They are consultants whose customized, value-driven approach offers processes and services that align with clients’ needs and future growth. Founded in 2006 by CEO Seth Morgan, they are financial experts positioned to understand a client and their businesses – to protect, guide, and empower. Clients who invest in building relationships with MLA Companies know that their purpose will not change, but their service offerings can grow as the business grows. At MLA Companies, the discussion with a client is centered around purpose and growth first – then finance and services second. Visit https://mlacompanies.com/
- Aiyengar, Anu; “Top 10 Trends Shaping Global M&A Activity.” January 12, 2022. jpmorgan.com/solutions/cib/investment-banking/2022-global-ma-outlook.
- Baird, Les; Harding, David; Kumar, Suzanne; Vorobyov, Andrei. “Global M&A Report Midyear 2022.” July 07, 2022, bain.com/insights/global-m-and-a-report-midyear-2022/.
- Golle, Vince; Yoo, Kyungjin; “Odds of US Recession Within Next Year Near 50%, Survey Shows.” July 15, 2022. bloomberg.com/news/articles/2022-07-15/odds-of-us-recession-within-next-year-near-50-survey-shows.
- Schnaubelt, Catherine; “3 Challenges to Consider When Selling Your Business.” July 8, 2019. forbes.com/sites/catherineschnaubelt/2019/07/08/3-challenges-to-consider-when-selling-your-business/?sh=126b837453f2.