The first half of 2018 played out like an investor’s dream, with global M&A hitting a record $2 trillion, and the momentum just keeps ramping up.
“2018 is off to a strong start, and I expect it to be one of the biggest years in recent history,” predicts Ed Bryant, President and CEO of Sampford Advisors, in our most recent SecureDocs Webinar, Tech Trends in M&A.
“This is one of the strongest markets I’ve ever seen, and it is expected to be one of the biggest years in recent history,” he concluded during his presentation on trends in the technology mergers and acquisitions market. Ed also discussed relevant valuation metrics, and explained what buyers are looking for and how companies can prepare for an M&A deal.
During the almost one-hour webinar, Ed delved into some of the intricacies that surround the M&A tech market. Identifying some of the main drivers of M&A tech valuation, Ed discussed how the size of a company, its sector of operation, and its EBITDA all impact how a buyer thinks about value.
Ed also touched upon other valuation strategies buyers use to make an investment decision, including the stage of company development and valuation by industry. Some important factors buyers’ consider include scale, growth, recurring revenue, EBITDA, monthly churn, and market size. Combining all of these elements, buyers continue to favor software companies, with hardware and IT service providers failing to capture investors’ imaginations in quite the same way.
“Everyone in today’s market is trying to move toward software acquisition,” he explained. “Making it harder for other sectors.”
Preparing to Sell
Ed also went into detail about how companies can decide when to sell and how to prepare for an M&A deal. Citing revenue growth as a primary indicator, Ed also emphasized the importance of EBITDA and the strength of customer relationships. In order to prepare, companies should make sure they have all their financial information organized and due diligence is “ready to go.” Most importantly, companies need to make sure they have their strategy and story well articulated so that buyers can clearly see where they are, and where they will go next.
“A lot about selling a company is articulating your story,” he said.
In all, the webinar provided a solid foundation to help both buyers interested in entering the M&A tech market as well as companies preparing to sell.