Although not quite as strong as the record M&A activity in 2015, 2016 was a very robust year for M&A transactions. The Colorado business transfer market mirrors that trend. Our office also had one of its best years and finished the year strong with three closings the last week in December, a closing last week, and another closing scheduled for this week. The strong activity is a reflection of several factors, which I will address below.
- Confidence in the economy – Similar to the strength in the stock market, the activity in the business acquisition market reflects buyers’ confidence that profits will continue to grow.
- Age Demographics – Many of our transactions involve baby boomers that are retiring. Our first transaction of 2017 involved a client that sold his business and is retiring to Hawaii. Due to the profitability of his business over the last several years and its increase in value, he was able to exit on his terms and complete an all cash transaction.
- Geographic Demographics – Colorado’s strong economy and desirable lifestyle continues to draw interest from buyers in other states. Our transactions in 2016 included buyers from Florida, Georgia, Iowa, and Washington DC.
- Availability of Capital – Business acquisition lenders are generally anxious to deploy capital. Although the regulatory environment is still cumbersome, there is a lot of capital available to fund transactions that make sense.
If you are considering the potential sale of your business within the next three years and would like a free, no obligation, confidential evaluation of your business, please contact our office. If your business reports its earnings on a calendar year end and you have not finalized your yearend financials, we may be also be able to provide some insight as to how to increase the value and marketability of your business.
The majority of our business is derived from referrals. Please consider referring our services if you encounter a situation involving the potential purchase or sale of a business.
Best wishes for a healthy and prosperous 2017,
Ronald V. Chernak
Inspiring business relationships since 1982!