Guy Asadorian Jr. is wealth director at BNY Mellon Wealth Management in Providence. He has focused much of his career on mergers and acquisitions throughout the country, and helps business owners navigate the process.
Asadorian talks with Providence Business News about deal-making trends, the economy and what business owners think about when considering a sale.
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PBN: How would you describe statewide, regional and national M&A activity throughout the first half of 2017?
ASADORIAN: According to data compiled by Pitchbook, M&A activity for North America and Europe is off approximately 20 percent for the first half of 2017 as compared to the first half of 2016. While there are no sources that I’m aware of that compile actual statistics on a local or regional basis, anecdotal evidence that I’m getting from other professionals active in the M&A market confirm that after a robust 2016, we are seeing a similar trend of deal activity slowing locally.
PBN: What’s lending itself to that activity, and what does that tell you about the corresponding economic conditions of those geographic areas?
ASADORIAN: While the Pitchbook data covers transactions in North America and Europe, it appears the slowdown is more pronounced in Europe. The slowdown in North America appears to be typical late-cycle uncertainty regarding the economic and political landscape. In Europe, economies and stock markets have been strong, so the drop off in M&A activity was somewhat unexpected. However, it appears that potential buyers are starting to worry about what happens when the ECB (European Central Bank) stops QE (quantitative easing) and starts raising rates.
PBN: Are there any specific types of deals you’re seeing more so than others?
ASADORIAN: From what I’m seeing, both strategic buyers and private-equity buyers are still active. Most of the clients we work with who have sold businesses in the last couple of years have made the decision to sell based predominately on a lack of a succession plan within the business. Most of these folks are aging baby boomers who, one, don’t have children in the business who are interested in continuing on and, two, understand that we are at the backend of a seven-year up-cycle in M&A and don’t want to ride through another downturn in the economy and the M&A cycle.
PBN: What industries are realizing the most robust activity?
ASADORIAN: National data shows the most robust activity to be in the business-to-business and IT sectors. Investment dollars tend to gravitate toward the sectors that are showing the fastest growth and these two fit the bill. On a local basis, I’m seeing a great breadth of sectors represented in completed deals. Deals have been done in the industrial, manufacturing, IT, software, wholesale distribution and retail sectors.
PBN: What are the greatest concerns you hear from business owners who are contemplating a sale?
ASADORIAN: My team and I at BNY Mellon Wealth Management specialize in working with successful business owners who are either exiting their businesses or in the planning stages of doing so. So, we have a large sample of clients who we have advised through this process. Frankly, selling a company can be a fairly traumatic process for someone who has owned and run a business for many years. The questions we hear most often are: One, will I have enough? Two, will my family be taken care of adequately as a result? Three, what am I going to do after I have sold the business? The Exit Planning Institute did a survey of business owners who had sold their businesses. What they found is that one year after selling, three out of four profoundly regretted the decision to sell. The primary reason is that most business owners fail to do the proper planning prior to the sale and aren’t properly prepared financially and emotionally.
Eli Sherman is a PBN staff writer. Email him at Sherman@PBN.com, or you can follow him on Twitter @Eli_Sherman.
