Page 57 - MetalForming July 2012

There are many reasons why middle-market owners wanting to sell their companies during the next 10 years should consummate a sale no later than 2014. Although
most points discussed in this article apply to all companies, the article is primarily directed at companies with transaction values between $5 million and $250 million.
more spending cuts will come, accom- panied by tax increases. These revenue- raising measures primarily will focus on increasing taxes on the wealthy—per- haps significantly—including the cap- ital-gains tax, which I expect to increase to at least 20 percent, if not 25 per- cent. An increase in the tax to 25 per- cent would reduce a company’s net after-tax sale proceeds by 10 percent— a sizeable hit.
3) Numerous private-equity (PE) acquirers have a pressing need to promptly invest capital. Many of these funds received money from their investors in 2008 before the market crashed, and much of that money has sat idle ever since. PE firms are under tremendous pressure from their investors to invest that money, and for certain companies they are willing to overpay rather than risk losing the deal. This pro- duces attractive selling opportunities.
4) U.S. corporations are flush with cash and have extremely strong bal- ance sheets. This makes strategic acquirers very aggressive in the acqui- sition market, and willing to pay strong multiples.
5) Interest rates are low and should remain so for the foreseeable future. I don’t anticipate the Federal Reserve deviating from its stated policy of
Aa I write this article late in March, I am more optimistic than I was last year about the prospects for the short- and intermediate-term (the next 2 to 3 years) acquisitions market. Market conditions will be strong throughout 2012, and likely will con- tinue that way through 2013 and quite possibly into 2014.
After that, the market becomes problematic, as I expect a severe down- turn before the end of the decade that will dramatically impact the acquisition
George Spilka is president, George Spilka and Associates, a national investment- banking and acquisition-consulting firm: 412/486-8189; spilka@george- spilka.com; www.georgespilka.com.
BY GEORGE SPILKA
and financial markets in the United States, and perhaps the rest of the world. The economic conditions such a downturn will create likely will linger for an extended period of time, poten- tially and significantly damaging the market value of many U.S. companies.
Why Sell Promptly?
The following are certain reasons why companies looking to sell should consummate a sale no later than 2014, and preferably by the end of 2013.
1) Acquisition pricing is very strong, and I would anticipate pricing to remain strong through the end of 2013.
2) It is certainly possible there will be a second Obama administration. To begin to significantly reduce the deficit,
If Selling Is in Your Future,
Move Quickly
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