Economic/M&A Market Factors
2 Economic/M&A Market Factors
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1. Economy
The company clearly has no control over the economic environment. We include it, though, because the economic backdrop has an effect on the way that buyers view a potential business purchase. It’s good to be aware of it even if management cannot influence these things. General economic expansion, stock market environment, and interest rates all factor into this part of a buyer’s evaluation process.
2. M&A Marketplace
Some companies will try to wait out a sale until the M&A market looks positive. Good M&A markets push prices upward to be sure. It affects the availability and terms of financing transactions. Favorable tax laws can also be a boon to prices and activity. If both financial and strategic buyers are actively purchasing companies, the business attractiveness is going to benefit. I believe that it’s too difficult to time this though. It’s best to take steps to be ready to sell at all times.
