Market Update: Insights from DealMAX 2024 Conference

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June 7, 2024

My partner, Terry Hannafin, and I attended the DealMAX conference last week, hosted by the Association for Corporate Growth at the Aria in Las Vegas. It was an incredible event with 3200 professionals from the M&A industry, and we had numerous meetings with potential private equity partners, strategic buyers, and deal professionals worldwide.
Here are some key takeaways and insights on the current market:

Supply and Demand

There will always be plenty of capital - private equity firms are eager to invest, and strategic buyers are looking for growth opportunities. However, despite the high demand, there's still a lack of supply of sellers in the market.

Valuations are bifurcated

High-quality companies (“A” companies) with strong management, recurring revenue, and solid market positions are still trading at high valuations, creating a feeding frenzy among buyers. However, “B” and “C” level companies are holding off, waiting for clearer market signals.  These sellers are not approaching the markets at the moment, and put the pandemic, supply chain and interest rate spikes further behind them in order to maximize value.  

Market Hesitation

Although we had originally anticipated a robust market by mid-2024, there's still a sense of waiting for a trigger for increased activity.   The markets seem to have found stability (no more interest rate increases) but they have not yet found confidence in the future (the picture is still murky, at best).   Once that there is confidence, indicated by a Fed rate decrease, then the markets should open back up. We expect increased activity in Q4 2024 or Q1 2025 the same as when the market anticipates these changes.

Tidal Wave of Transactions on the Horizon

The cumulative effects of COVID-19, supply chain disruptions, and fluctuating commodity prices and interest rate spikes have delayed many private owners from bringing their companies to market. With these challenges now stabilizing, we foresee a surge in family-owned businesses entering the market soon.  There is a huge pent-up supply of companies (both PE backed as well as family-owned and founder-led) that should flood the market as soon as practicable.  This tidal wave of companies, however, will shift the supply and demand imbalance the other way, leading to lower valuations and a ‘buyer-friendly’ market for a while.  

Preparation is Key

For business owners considering a transaction, preparation is crucial. Start building your advisory team, capitalize on low-hanging fruit in your business, and get ready to take advantage of potential opportunities. The groundwork laid now will be vital when the market picks up again.
At Carter Morse & Goodrich, we're here to help you navigate these exciting times. Visit our website for more resources, or better yet, give us a call. We pride ourselves on being the most user-friendly investment bank and look forward to assisting you in your M&A journey.
Stay tuned for more updates, and cheers to a promising future in the M&A market!

About Carter Morse & Goodrich

Located in Southport, Connecticut, Carter Morse & Goodrich is a boutique M&A advisory firm that specializes in representing founder-led and family-held businesses valued between $25 million and $250 million. While CMG provides a full range of investment banking services, our primary focus is representing owners who are pursuing their once-in-a-lifetime M&A transactions. CMG specializes in advising leading companies in niche markets to plan, prepare, execute, and close successful transactions that maximize shareholder value. CMG fully understands and appreciates the unique dynamics of closely-held businesses and the importance of owner legacies. For 35 years, the combination of our hands-on approach, senior banker attention, strategic guidance, seamless transaction execution and extensive network of domestic and international resources has enabled us to become a trusted advisor to hundreds of business owners.

CMG's Broker/Dealer affiliate, Carter Capital Corporation, is a FINRA member firm registered with the SEC and SIPC.

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