In early 2021, though the added impact of the Free Trade Agreement with the EU remains to be understood, deal activity and investment appetite is anticipated to accelerate.
Businesses, entrepreneurs and investment funds are actively targeting acquisitions for a variety of reasons: finding growth, regenerate flagging profit margins, access new markets or products, fill gaps in skills or technology, take advantage of increasing digitisation.
THE IPO market has also performed strongly and offers alternatives for many of the more desirable and sizeable enterprises.
Whilst it is inevitable some entities will be acquired from distressed situations, demand for acquisition targets continues to outstrip available supply.
In today’s market you should still expect to pay a sensible price for a quality business. In some sectors, valuations are the same or higher than recent years and with the volume of capital and cheap debt available supports the high demand.
In this scenario, entities are paying more attention to how to create value from their acquisitions. A buyer with a clear idea of what they are looking for in an acquisition and, if relevant, how it is to be integrated with existing operations, how it will be financed has a clear advantage and position in today’s market. Active acquirers are continuing to approach businesses and seek out that elusive opportunity.
In any acquisition, the stock tendency is to be cautious and especially in a world that is changing quickly and aim to minimise risks and to protect the downside. Across many sectors there are issues in the way or strong headwinds.
However, current market dynamics do provide interesting opportunities for the active or brave acquirer and those that move swiftly and combine a clear, coherent strategy with strong funding.
If an acquisition strategy is a serious option, the active players are already searching out new targets or have remained active in the market. Otherwise don’t be surprised if the interesting targets have gone by the time you get there!