PWC reported recently that 46% of CEO’s in their survey indicate they plan to sell their company, and of these 66% said they plan to sell within the next five years. The primary reason cited in the report is to diversify and create liquidity.
My experience with CEO’s of privately held firms is they typically have most of their net worth in tied up in their company. They’ve seen the drastic drop in their stock portfolios, missed opportunities to sell at the market peak in 2007 and are getting closer to retirement age. I had one CEO tell me he didn’t think he could last until the next big upturn in the M&A market and he can’t chance more downturns.
I think you will see a record number of owners looking to sell starting in the next 12 months (perhaps sooner if the capital gains tax debate resurfaces) and you have record amounts of cash sitting on the sidelines which will start moving into the market in the next 12-15 months. Put on your seatbelt because I think we are preparing for a very exciting ride in the M&A market.