While 2017 was a good M&A year for selling businesses, we believe that 2018 will be an even better one. Why? Most business owners we deal with have had a record, or at the very least, a better-than-average year. Interest rates remain low, and with the changes in tax rates, we expect to see more activity from sellers that still own C Corporations. In addition, banks are eagerly willing to lend money to buyers, and thousands of private equity groups are searching for sellers to put their capital to work, so we expect values paid for businesses in most industries to be higher than normal. All of these factors, combined with the fact that we don’t know when the next recession will hit, lead us to believe that there may not be a better time to sell. The last recession ended June 2009. Below is a list of the eight recessions over the last 57 years, showing the length of time since the previous recession.
|Recession-Beginning to Ending||Time from last recession|
|Apr 1960 to Feb 1961||2 years|
|Dec 1969 to Nov 1970||8 years, 10 months|
|Nov 1973 to Mar 1975||3 years|
|Jan 1980 to Jul 1980||4 years, 10 months|
|Nov 1981 to Nov 1982||1 year|
|July 1990 to Mar 1991||7 years, 8 months|
|Mar 2001 to Nov 2001||10 years|
|Dec 2007 to Jun 2009||6 years, 1 month|
|Next one Unknown||8 years, 6 months-still going|
We follow the economist Allan Beaulieu with ITR Economics. He still contends, that as he stated at the beginning of 2017, he expects to see slowing growth in the second half of 2018 into 2019. At the January 2017 ACG meeting he said that there’s a very good chance of a mild recession in 2019. Make your plans for your business accordingly!