2013 Year to Date Trends

Posted by michael | February 23, 2013

Even though its only the end of February, its never too early to comment on market trends that we are seeing so far this year.  Based on our activity and what we are hearing from our clients and associates, here is what is happening so far in 2013:

  • General transaction activity (financing, sales and succession plans) has taken a collective pause.  Given the level of 2012 Q4 activity this isn’t a surprise.  In the past few weeks we’ve seen some smaller activity start to occur so we fully expect that things will heat up in Q2.
  • There seems to be a renewed interest in undertaking some type of strategic planning.  Our pipeline report shows six new strategic planning projects in various stages. We haven’t seen this type of interest since 2007.  The big difference this time is that companies are focusing on specific questions about the business that result in very broad and flexible plans instead of the traditional planning process.
  • While sale side transaction activity is taking a pause, interest in pursuing strategic acquisitions is the highest we’ve seen in years.  We have several search engagements underway and are in discussions on several more.
  • While strategic buyers are starting to surface and pursue acquisitions, the number of individuals who are actively looking for opportunities is nonexistent.  Our small business group has several attractive businesses for sale that are in need of new owners.
  • Revenue seems to be a challenge across the board, regardless of industry.  That doesn’t mean there is a lack of activity, but companies seem to be delaying on making decisions which is resulting in push outs.  We haven’t found any commonality as to why this is occurring.
  • On the financing front we continue to see a move away from the larger financial institutions and more towards the community banks that are focusing on customer service.  Prepayment penalties are slowing the pace down for now but we expect that to change as Balance Sheets continue to de-leverage.

So far, it appears to be another year of unknowns.  We’ve learned our lesson about prognosticating, but assuming that  interest in strategic planning and acquisitions are leading edge indicators, we are cautiously optimistic that the economy will start to show signs of life in the second half of the year.