LATEST MID-MARKET M & A RESEARCH WHITEPAPER

1. December 2013
LATEST MID-MARKET M & A RESEARCH WHITEPAPER
Acquisitions:
Currently 79% of mid-market firms are in the process of making an acquisition or are open to
doing so within the next 12 months, with 31% of these open to the idea of being acquired
within the same 12 month period.
14% of firms are actively seeking a target for acquisition, whilst 40% are passively receptive
or opportunistic in regards to acquiring or being acquired. Market optimism is high, with over
50% of firms taking the viewpoint that today’s prices will remain stable and over one third
believe that prices will increase.
Key acquisition drivers of mid-market firms are represented below:
24%
23%
41%
41%
41%
40%
37%
36%
34%
33%
30%
30%
70%
Drive revenue growth
Expanding geographical reach
Improving operational efficiency
Add adjacent products or services to core offerings
Put surplus cash to work
Better meet market expectations
Eliminate a competitor
Increase production capacity
Expand human resource pool
Access technology / technical capabilities
Best way to accelerate growth
Enter a new vertical market
Improve distribution capacity
On average mid-market firms aim to purchase 2.4 business in 2014, with the majority (56%)
spending under $10m to do so and 30% intending to spend between $10m and $50m.

2. 38% of all business aiming to sell, are only looking for a partial sale, the key drivers to selling
both the entire organisation or part of the organisation below:
Selling the entire organisation
Selling part of division

3. Concerns related to acquiring
The top four concerns firms have when acquiring are the inherited liability they may come
across (35%), the due diligence (27%), losing key employees after the acquisition (27%) and
overpaying for the firm they acquire (26%).
Inherited liability
Due diligence
Losing key employees after acquisition
Overpaying / over evaluation target firm
Client perceptions of impact on quality or service
Merging differing corporate cultures
Distraction during process
Disruption during integration
Market fluctuations affecting asset values
Legacy issues / disruption of succession plans
Lack of knowledge of process
Acquisition tasks for advisors
9%
12%
16%
20%
19%
27%
27%
26%
25%
25%
35%
It is no surprise that the top four acquisition tasks for advisors closely relate closely to the top
four acquiring concerns - these tasks being; valuing the target firm (77%), due diligence
(68%), financing (60%) and opportunity assessment (59%).
18%
50%
47%
60%
59%
59%
68%
77%
Valuation
Due diligence
Financing
Opportunity assessment
Build bidder / buyer list
Bidding strategy / negotiation
IM / offering book
Integration

4. Concerns related to selling
The top four concerns firms have when selling are being underpaid or undervalued (41%),
losing key employees (33%), clients perception of a change in quality (31%) and losing
control of their business (27%).
Being underpaid / undervalued by acquirer
Losing key employees
Clients perception of impact on quality or service
Losing control
Merging different cultures
Meeting stated targets ( revenue or growth )
Disruption to business practices after sale
Selling tasks for Advising
22%
22%
22%
27%
26%
33%
31%
Valuation (85%), bidding/negotiations (69%), due diligence (62%) and building the
bidder/buyer list (59%) are the top four tasks for advisors preparing to sell a business.
62%
59%
Valuation
Bidding/negotiation
Due dilligence
Build bidder/buyer list
Opportunity assessment
Offering booking/IM
Financing/funding
In relation to skill and expertise, business brokers received the lowest score for all three
categories of firm size (5-25, 25-100, >100)
41%
Distraction during sale process
10%
28%
45%
58%
69%
85%
Integration