Grant Thornton Dealtracker 2014
Conditions are improving as growth sectors drive market confidence, signalling now is the prime time to plan for acquisitions or selling a business as the market finally recovers, according to the latest findings in the Grant Thornton Dealtracker 2014.
“We’ve seen equity markets in general have a good run, but that hasn’t yet translated into the private market. However there’s still hope, the report shows a 36% increase in median listed company valuation multiples, which we expect to translate into the broader private market in the coming year.
“What we’re seeing is strong valuations being achieved in sectors with high growth opportunities, such as infrastructure, aged care, education and information technology. Deals in these sectors seem to be fetching really good values,” said Paul Gooley, National Head of Corporate Finance, Grant Thornton Australia.
What’s driving increased activity and improving market conditions?
- strength in the IPO general equity markets
- focused bidding from private equity firms
- continued interest from overseas investors (26% overseas acquirers) and
- an increased appetite from private vendors to take advantage of improved conditions
While transaction multiples are yet to increase, now is the time to consider preparing your business for an acquisition strategy or assessing the readiness your business’ ability to fetch higher values as market conditions improve.
“Big premiums are being paid for better prepared businesses, the market has finally recovered and now is the time to consider a plan to ensure mid-size businesses looking to sell or acquire are best positioned to take advantage of the expected improvement in market conditions,” said Mr Gooley.
“Successful mid-size businesses fetching higher sale prices have done so by putting their thinking and strategy into improving the value of their business through the implementation of measures that focus on key value drivers of acquirers.
“Those that don’t are the ones seeking advice when they’re actually ready to sell or about to undertake an acquisition. At this point, it’s often too late to implement the strategies needed to maximise the value.
“Those considering selling or acquiring need to be thinking about business scalability, growth plans, quality financial and management reporting systems, forecasts and depth of management teams.
“The market is ready. If you’re thinking of selling or acquiring, now is the time to develop and implement your strategies so you can take advantage of the expected increase in opportunities and valuations for vendors,” said Mr Gooley.
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