M&A Outlook 2019Still a Seller’s Market – for Now
Another Strong Year is Expected
The majority of companies believe that 2019 will be another robust year for M&A activity.
What’s Driving the Continued Strength?
An expanding economy- A supportive regulatory environment
- Beneficial corporate tax policies
- Low interest rates
Anticipate another strong year
Frequent Solicitations are Making Companies More Likely to Consider M&A
43%
Increase in M&A solicitations
2-5
Average solicitations per month
External Growth is a Big Driver for Buyers
Many companies are having trouble generating sufficient growth organically and are expecting growth to come from an external source, particularly M&A.
71%
Potential buyers actively engaged in an M&A transaction or open to one
Buyer Interest is Equally Divided
Bolt-on Acquisitions
Transformative Acquisitions
Both
58%
Would consider international acquisition
The Capital Markets are expected to remain accommodative in the year ahead and the majority of buyers believe interest rates and debt financing will either aid or have no impact on acquisition plans.
Record Valuations are Attracting More Sellers
If valuations have tempered buyer demand, they’ve had the opposite effect on sellers.
Potential sellers engaged in an M&A transaction or open to one
52%
Sellers would consider an international buyer
Why?
- More likely to retain the current leadership team
- Provide access to global markets
- Pay a higher price
Scope of Sale
Relentless focus on growth is driving seller interest in divestitures.
Entire Business
47%
Part of Core Business
33%
Ancillary/Non-core
20%
Elevated Corporate Valuations are Expected to Go Higher
Amid premium multiples, both buyers and sellers see prices rising in the year ahead.
Expectations of Company Valuations Over the Next Year
How would you characterize current corporate valuations?
Companies Who Expect Valuation Growth in 2019
B2B Services
Technology
Healthcare
Other
Consumer Services
Industrial
The Advisor Advantage
Buyers and sellers are equally inclined to partner with an advisor as it pertains to their M&A initiatives, a preference that is unchanged by the market backdrop.
Likelihood to Engage M&A Advisor
Buyers
63%Likely
Top Reasons Why:
- To speed up process
- To help with due diligence
- To help assess an opportunity
Sellers
65%Likely
Top Reasons Why:
- To speed up process
- To help get the best price
- To help structure financing
The Strong M&A Environment Won’t Last
Most companies believe the M&A market will be strong in 2019, but they also see changes on the horizon.
When Will the M&A Market Change?
What Will Cause the Change?
Rising Interest Rates
Economic Slowdown
2020 Elections
Stock Market Dip
Unforeseen
What can buyers and sellers expect going forward?
Download the 2-page summary highlighting key findings from the survey.
Contact Us
Contact us to learn how we can help your business reach its potential.
Ralph M. Della Ratta
Head of M&A Advisory
Citizens Commercial Banking
About Citizens Capital Markets
Citizens Capital Markets provides M&A, capital raising and other financial advisory services to middle market companies across a focused set of industry verticals. We deliver thoughtful advice, keen market insight and superior execution to our clients, both nationally and internationally, and our managing directors average nearly 30 years of experience and have executed more than 700 transactions throughout their careers.
Citizens Capital Markets is a part of Citizens Financial Group, one of the oldest and largest financial institutions in the U.S. Also, as a member of Oaklins, the world’s most experienced mid-market M&A advisory organization, Citizens Capital Markets has unparalleled access to global companies and investors.
If you are interested in learning more about our capabilities and expertise, visit citizensbank.com/commercial.