Many Factors Point to a Stronger Year for M&A - O'Keeffe and O'Malley

Many Factors Point to a Stronger Year for M&A

Jan 31, 2014

Kansas City and the rest of the nation have good reason to expect a stronger 2014 for mergers and acquisitions. The Kansas City area saw 128 merger-and-acquisition deals, which was down 15.2 percent from 2012. It was the least activity since 2009, which saw only 114 deals. Nationally, things didn’t pick up until the fourth quarter of the year. And even though the year was a bit slow overall, a few select industries saw increased business sales. Those that enjoyed increased sales were in the areas of health care, financial services, retail, energy and manufacturing.

A few major corporate deals, more positive economic news, continued low interest rates and gains in manufacturing should provide the necessary boost to make this a much more active year. A study by predicts that 2014 will be a big year for small business sales, particularly because so many baby boomers are ready for retirement. Of brokers surveyed, 76% said they expect more baby boomers to sell their businesses in 2014. Among those surveyed, stronger economy was cited as another major reason that more businesses are expected to go on the market this year.

In a survey of 1,000 M&A professionals conducted by Mergers & Acquisitions magazine, the biggest factor expected to impact an increase in deals this year was that companies have held on to large cash reserves. Sixty-three percent of respondents expect to buy businesses in 2014.

The industries that respondents thought would be most active in 2014 were technology/telecom/media (44%), healthcare/pharmaceuticals/life sciences (41%), financial services (28%), energy/oil and gas (27%), consumer markets (21%), and diversified industries (18%). *

As the M&A market improves, it’s even more important to be prepared with an exit strategy, to demonstrate strong financials, and to position your company in the best possible light for a sale.


*Multiple responses permitted

Sources: The Kansas City Business Journal, The Kansas City Star, Mergers & Acquisitions Magazine