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Aquisition Activity & Values are Increasing
Acquisition Activity: Acquisition activity increased in the last few years and is increasing further yet in 2006. In addition to low interest rates and the low capital gains tax rate, other factors having a positive impact include an improving economy, stock market gains, and increased foreign buyer activity.
According to Mergerstat, there were 10,511 transactions announced in 2005, a slight increase from 10,456 in 2004. This is a significant reversal, however, from the declines of the previous years, as highlighted in the following table, Merger and Acquisition activity is at all-time record heights.
Business Values: An examination of Pratt's Stats reveals that business values have increased recently. Increases are reported across all industries and were the highest in
the service and distribution sectors.Other Trends: Demand for businesses between $3 and $100 Million has increased. Savvy buyers understand that small and mid-sized businesses often operate in niche markets and represent better growth opportunities than larger, more established businesses. In addition, private equity firms have raised $100 Billion during the past few years. These funds must be invested soon or returned to the original investors.
