2018

A Year for Growth – 2018 at Generational Equity

December 10, 2018 By John Binkley

2018 is coming to a close, and with it the end of a memorable year for Generational Equity and the M&A landscape in general.

Dr. John Binkley has been very proud of the growth Generational has enjoyed in the last 12 months, supported by the very active M&A landscape and the efforts of its team and clients. In many ways it will go down as a landmark year for the firm, both in terms of what was achieved during 2018 and the groundwork it laid for next year and beyond.

Here, Dr. Binkley would like to share some of the highlights of 2018 at Generational Equity, and his hopes for the future of the firm.

2018 M&A Activity

Before Dr. John Binkley delves into the developments Generational Equity made in 2018, he felt it was fitting to take a glimpse at the wider M&A landscape.

The excellent seller’s market that has been a feature of the last few years continued throughout 2018, resulting in record-high levels of M&A market activity. Data from the Merrill Data Corporation revealed that deal value in the United States and Canada is up over 27% compared to 2017.

Furthermore, Mergermarket revealed that between Q1 and Q3 of 2018, U.S. M&A reached its second-highest total in terms of both deal value and number of deals – $1.1 trillion and 4,100 transactions respectively. This exceptional, consistent market is due to a variety of factors:

Healthy economies both regionally and nationally
Elevated buyer interest, especially among private equity firms
High confidence among business owners at all levels about opportunities for growth and M&A activity
Tax reform in late 2017 that reduced the corporate tax rate and spurred repatriation of funds held overseas
Low interest rates that have remained stable all year

The positivity of U.S. and global M&A is reflected in Generational Equity’s activity across the year. On deal closings compared to last year, the firm is up 12% as of now. This is remarkable as 2017 was our previous record year, which 2018 is set to beat considerably.

Generational Growth

As the title suggests, the theme of 2018 at Generational Equity was growth. For Dr. John Binkley, who has spearheaded the firm’s development from the start, it has been heartwarming to see the Generational Group’s unwavering expansion under the direction of his son, Ryan.

Generational’s expansion took several significant steps forward in 2018, including the introduction of four new office locations. The first, in April, was one close to home, as the firm opened an office in Austin, Texas, just a few hours’ drive from their headquarters in Dallas.

This was followed by two expansions in the dynamic Midwest market, with new offices in Columbus and Cleveland, Ohio. These locations were selected for their strong foundations, attractive business targets and access to a wider network of clients and buyers, that Dr. Binkley believes will be key to future growth.

Finally, Generational Equity opened a fourth new office in Manhattan, New York. This not only represented a big market but will also better serve the growing international demand for the firm’s services.

“Our company continues to implement its strategic plan to open more offices in the key target markets across North America in an ongoing effort to better serve middle market businesses.” – Brenen Hofstadter

The New York office also highlighted another aspect of Generational’s growth in 2018 – quality personnel. While Generational Equity has always featured some of the most experienced, dedicated professionals in middle market M&A, it always embraces fresh talent.

This was the case with David Fergusson, who was brought on as Senior Managing Director and Group Leader, and now heads up our New York office. Fergusson has over 30 years’ business and M&A experience, and is the former Co-CEO and President of The M&A Advisor.

David was one of several new additions to the Generational family. Highly experienced business leader and senior level executive John Hyman joined Generational Equity as Executive Managing Director, while Samantha Cooper O’Kane joined as Associate General Counsel, offering effective legal expertise.

Last but by no means least, Generational Equity welcomed a new team that has expanded the range of services it can offer to its current and future clients. By acquiring a majority stake in Talis Advisors, Generational added an award-winning wealth management firm to the group, meaning they can help clients preserve their wealth, as well as unlock it through a systematic exit strategy.

M&A Milestones

Alongside this great growth throughout Generational Equity, Dr. John Binkley was very pleased with the major milestones that the firm passed in the last twelve months.

The most notable milestone was surpassing $4 billion in wealth transferred to its clients across the entire Generational Group. This is an unprecedented level of activity for firms specializing in the lower middle market, and a great testament to the skill, experience and commitment of its M&A professionals.

“We strive to make a genuine difference in the lives of our clients, and this achievement is a tangible demonstration of that. It’s very gratifying to play a role in helping our clients attain their financial goals and help create the legacy they have worked so hard to build.” – Ryan Binkley

Generational Equity also closed its 700^th transaction back in May, another standout achievement in their industry. But, above this was the fact that this represented 700 business owners the firm had helped secure their financial legacy and achieve a successful exit.

An Award-Winning Year

Generational’s primary focus is going to any lengths for their clients, so it’s always an honor when that hard work is recognized. Dr. John Binkley appreciates that the methods and values he introduced and helped refine over time are respected by his peers.

At The M&A Advisor’s 17^th Annual M&A Awards in November, Generational Group was once again named Investment Banking Firm of the Year, an award they also received in 2017 and 2016. These back-to-back-to-back victories highlight the consistency the firm has shown in recent years, and how resolute the team is in its dedication to its clients.

Generational Capital Markets also walked away with the Corporate/Strategic Deal of the Year ($10mm-$25mm) for its support of its client, Ammex Plastics, in a sale to Echo Engineering and Production Supplies.

Earlier in the year, Dr. Binkley was pleased to see several of Generational Equity’s staff recognized as Emerging Leaders by The M&A Advisor – Musa Jagne, Ryan Johnson and Luan Ly. This was a result of the thorough training they received at Generational alongside their own ability and determination.

Generational Equity Giving Back

2018 was a great year for Generational Equity supporting its own development, but also it was a big year for supporting others. Dr. John Binkley is devoted to supporting good causes and the community that has allowed his firm and family thrive. So, he was especially proud of the way Generational supported both throughout the year.

At the tail-end of 2017, Generational was title sponsor of the Dallas Jingle Bell Run (which Dr. Binkley is pleased to share will be the case in 2018 as well). This fantastic family-friendly and dog-friendly event encourages the community to get moving and embrace the festive spirit by wearing their favorite holiday attire.

The Jingle Bell Run also raises money for two great causes – The Trinity Strand Trail and The Mavs Foundation – organizations that go a long way to improving lives and our environment. In February, Generational was delighted to deliver a check for $82,416 to these foundations to continue the amazing work they do. The team is looking forward to repeating this next year.

Generational also raised money for causes close to Dr. Binkley’s heart through one of his favorite pastimes – golf. Generational Group sponsored two charity golf tournaments in 2018. The first in May was in support of Here’s Life Africa, a nonprofit interdenominational mission ministry committed to spreading God’s Words and support villagers in the poorest countries in the world.

Later in the year, Generational was also title sponsor for The Salute Golf Tournament, an annual event to raise funds for post 9/11 vets who need help not provided to them by the Veterans Association. This was another big success and it was a privilege to spend time in the company of brave men and women who served our country.

What does 2019 hold in store for Generational Equity?

2018 has been a memorable year for Dr. John Binkley and the whole team at Generational Equity, much of it only possible due to the unwavering support of the firm’s clients and team members. This has been the foundation for much success in recent years.

As for Dr. Binkley’s hopes for 2019, he is looking forward to the continuation of the expansion that accelerated this year, as Generational settles into new markets and extends its reach to business owners across North America and worldwide.

Plus, with forecasts suggesting that the current M&A seller’s market will extend into 2019, Dr. Binkley is optimistic about the near future of M&A and the prospects for owners seeking to exit for the optimal value. He hopes that, through Generational’s eye-opening conferences and expert guidance, the firm continues to guide more people to fulfilling exits.

Hopefully you have enjoyed this trip down memory lane. If you’d like to learn more about these events, Generational Equity’s collection of press releases goes into greater detail on each of these milestones.

And, for a greater appreciation of how M&A has evolved in 2018 and how to capitalize on the current seller’s market, check out more of Dr. John Binkley’s blog posts. He hopes 2019 proves as prosperous and memorable for you as 2018 did for him.

A Record-Breaking Seller’s Market? Reviewing 2018 M&A Activity So Far

July 19, 2018 By John Binkley

As Dr. John Binkley and many other prominent voices in mergers and acquisitions have identified in depth, we are currently in one of the strongest seller’s markets in decades.

This is something Dr. Binkley and everyone at Generational Equity is keen to ensure that clients are aware of, as these are the phases when buyers are most active and more willing to spend a premium on companies. Being able to time your exit during a seller’s market gives business owners a great opportunity to achieve maximum value.

But, just how exciting is global M&A activity right now? Well, according to the latest numbers from Bloomberg, it’s reaching unprecedented levels.

Already in the first half of 2018, $2.5 trillion worth of transactions have been announced worldwide, which is a 61% increase compared to the first half of 2017 and the highest on record for this time of year.

To put this in context, the current value of activity has already exceeded the entirety of 2009’s annual deal values. In addition, this is the sixth quarter to surpass $1 trillion in announced deals since the start of 2015.

This astonishing number is well on course to exceed 2007’s record of $4.1 trillion by the end of the year. And, while 50 percent of M&A transactions were accounted for by “mega deals” (deals greater than $5 billion), there have been notably valuable transactions being completed at every level, including Generational Equity’s focus: the middle market.

In fact, Dr. John Binkley is very pleased that Generational Equity is also on course to achieve a record-breaking year for deals completed and the value of wealth transferred to clients.

So, we know that global M&A activity is reaching record highs in 2018, and those with a professionally prepared exit strategy are finding great opportunities to pursue the maximum value for their business. But what is driving this landscape?

Here, Dr. Binkley focuses on a few notable industries that are enjoying record levels of transactions, factors that are making this an incredible seller’s market, and a few notes of caution on why business owners contemplating exit shouldn’t expect this market to last forever.

Industries Thriving from Record-Breaking M&A Activity

One of the great benefits of the current seller’s market in M&A is that it’s positively impacting virtually all industries right now.

For Dr. John Binkley, the growing familiarity of cross-industry acquisitions plays a big role in this. Buyers are looking beyond their industry to find companies that will open access to new markets, bring improved technology, and enhance their workforce.

However, some industries have experienced exceptionally high levels of deal making in 2018 thus far, and Dr. Binkley wanted to look at these in greater depth. Not only will this encourage business owners in these sectors on the opportunities open to them, but it will also outline factors that are impacting M&A activity across all industries.

Media

The media industry has seen $140 billion across 950 transactions so far in 2018, a 43 percent increase in deal volume compared to this time last year. And, before you ask, this number excludes the Time Warner and Twenty-First Century Fox mega deals.

According to Media Post, many of these deals have typified two key trends in M&A that Dr. John Binkley has noted in the past – mature companies driving for future growth and the capacity of private equity firms to enable large-scale acquisitions.

Consumer Goods

M&A activity in the consumer goods industry reached a 15-year high last year, which has continued into 2018. 2017 represented a 45 percent rise against the number of transactions completed in 2016, but even more notably, a 190 percent increase in deal value.

These transactions are presenting a wide variety of M&A strategies, but a prominent driving force is the technological sophistication of smaller and middle market businesses compared to established yet traditional brands. This digital edge gives sellers who have focused on technology and innovation a definitive advantage in achieving maximum value on exit.

Healthcare

Deal making in healthcare, particularly among pharmaceutical companies, has boomed in the first half of 2018, resulting in $100 billion spent in mergers and acquisitions, according to BioSpace. And, with notable names like Johnson & Johnson and Allergan expected to make further moves, this could be an emphatic year for the healthcare industry.

BioSpace points to changes in the U.S. tax code as the impetus for this M&A activity, another factor that Dr. John Binkley and Generational Equity have highlighted as a driving force in the current seller’s market. With the corporate tax rate around 20 percent, it is easier for Big Pharma companies to repatriate overseas holdings to finance transactions.

Reasons Why Now is the Strongest M&A Seller’s Markets in Years

Generational Equity has regularly identified key dynamics that make this one of the strongest seller’s markets in decades, and deeper investigation into several industries’ approaches to M&A this year only proves to confirm the influence of these factors.

As previously mentioned, the growth in both the number of private equity firms and the funding available to them has been pivotal to deal making, particularly in the middle market. Dr. Binkley noted in a recent blog that $1.7 trillion worth of “dry powder” was available at the end of 2017, according to the Global Private Equity Report 2018.

Tax law changes have also had a definitive influence – the fall of the corporate tax rate and greater opportunity to repatriate funds has really set the stage for M&A activity. Not only are more funds available for buyers to invest in acquisitions, but lower tax rates also make companies considerably more attractive to buyers. Plus, the positive economic climate has continued to make debt financing for M&A activity readily available.

If you’d like to learn more on why the current seller’s market in M&A is reaching record levels, Dr. John Binkley’s previous blog post identifies seven signs of a strong M&A market. With the incredible level of deal value already achieved in 2018, this information could help you define when the market is primed for selling a business.

Capitalize on M&A Activity While It Lasts…

However, while it’s right to celebrate the undoubted strength of the current seller’s market, Dr. Binkley notes that you shouldn’t expect this to last forever.

Indeed, the article by Bloomberg includes several notes of caution for those contemplating their exit plans. Because, in truth, nobody knows exactly when this seller’s market will end, but unfortunately it will one day.

These warning signs include:

A flattening yield curve that could invert, causing long-term interest rates to fall below short-term interest rates and indicates a recession
The number of announced deals has dropped 10% compared to 2017, indicating that while deals are more valuable, they could be reducing by quantity overall
Antitrust laws
Unpredictability in the stock market, especially as a result of trade war with China and other geopolitical tensions between the U.S. and other nations

So, a final word of warning from Dr. John Binkley – seller’s markets are great times for the M&A industry and they’re when business owners that are looking to sell are most likely to achieve maximum value – but this current climate will not continue indefinitely.

If you’re ready to take this step, now is the time to get prepared. While 2018 could go down in history as the strongest year for M&A since records began, that won’t mean much to you if you miss this window of opportunity.

If you’d like to learn more, Generational Equity’s M&A insights are regularly updated and filled with information that could help to secure your business legacy.

Why Middle Market Businesses Should Capitalize on M&A in 2018

February 9, 2018 By John Binkley

You are probably well aware that 2017 was a strong year for the middle market, both in regards to company growth and mergers and acquisitions (M&A). Dr. John Binkley was fortunate to witness this up close in his role as Chairman of Generational Equity, an M&A advisory firm that enjoyed a record-setting year for deals completed.

However, you might be unsure if this positivity will continue into this year. Fortunately, Dr. Binkley firmly believes 2018 will not only maintain this growth for middle market businesses, but has the potential to improve it.

Here, you will understand why this year will be an excellent one for middle market companies, and how effective use of M&A will help owners reap the full benefits of this buoyant period.

Why It’s Great to be a Middle Market Business Owner in 2018

“For the middle market, 2017 can be summed up as a year of strong growth in both revenue and employment.” – National Center for the Middle Market

In their quarterly Middle Market Indicator (MMI), the National Center for the Middle Market outlined the growth and optimism within this vital segment of the U.S. economy. Favorable conditions in 2017 encouraged growth across all industries, both with regards to revenue, employment and confidence:

Companies ended 2017 with year-over-year revenue growth of 7.6% (second-highest rate in MMI’s history)
A 5.2% increase in headcount among businesses, with over half of all middle market firms adding to their ranks
Local economy confidence at 88%, with national economy confidence close behind at 86%

The fruits of 2017, combined with the pivotal tax reforms confirmed in the year’s final months, mean middle market leaders are increasingly confident for 2018. Dr. John Binkley has met with owners who have reached out to Generational Equity, sharing this optimism. In summary, the middle market is booming right now.

Of course, when conditions are this good, it is all too easy to rest on your laurels. So, it is especially exciting that this confidence has encouraged business owners in the middle market to invest rather than save:

“The proportion of firms that would invest extra money as opposed to hold it remains near peak levels.” – National Center for the Middle Market

Dr. Binkley sees this as great news as, despite the overwhelming confidence among business owners, there are certainly areas of concern that need to be addressed. Talent management and market competition remain key challenges that middle market owners are trying to overcome.

This is where strategic investment in M&A activity, with the right advisors behind you, can help entrepreneurs benefit to the absolute fullest.

Utilizing M&A Activity in the Middle Market

The most recent Citizens Commercial Banking Middle Market M&A Outlook has indicated an increasing interest among middle market business owners for M&A. 56% of sellers are either currently involved in or open to M&A activity in 2018, which coincides with a boost in buyer confidence.

If there’s one thing Dr. John Binkley was certain to include in the M&A advice that Generational Equity offers to middle market owners, it’s that good timing is essential.

That’s why the firm encourages that you always build your business with a buyer in mind – it allows you to capitalize when the market is thriving (like right now) – and not miss out on an optimal deal.

What makes 2018 such a great time to consider M&A activity in the middle market? As previously mentioned, buyer confidence is extremely high, with investors sitting on a record amount of dry powder that is just waiting to be invested.

All these facts combined means buyers are on the lookout for opportunities – if your business is prepared, you have a better chance of receiving a premium offer for your company.

In addition, the pro-growth provisions contained within the recent tax reforms will undoubtedly encourage investment:

“There is tremendous sentiment that M&A activity in the middle market will surpass 2017 levels this year. Both the size of deals and the quantity of those deals will likely be much higher, as both sellers and acquirers look to take advantage of the act’s pro-growth provisions. It is important to realize all of the benefits and potential hurdles the act contains so that all parties will benefit from their transactions.” – Gary Wallace, Mergers & Acquisitions

As Dr. Binkley and the team at Generational Equity regularly remind company owners, M&A activity does not necessarily mean the definitive sale of your business. On the contrary, the sale of certain assets or introduction of investors could be the key to securing the capital to combat the challenges of talent management and industry competition, which as mentioned earlier are prevalent problems facing middle market companies.

Of course, if you are ready to sell your business, these conditions are equally ideal. With confidence high and capital available, your middle market company could fetch a premium price from interested investors.

To ensure that end result is achieved, Dr. Binkley encourages you to reach out to experienced M&A advisors, such as Generational Equity. Good timing is essential, but without the knowledge or tools to locate buyers and build your business valuation, you are less likely to receive the optimal return on investment for the years spent growing your company.

What will 2018 mean for your Middle Market Business?

On the whole, Dr. John Binkley predicts 2018 will be a great year for business owners in the middle market. The optimism in the national and global economies, combined with exceptional company growth in 2017 and new tax legislation, has led to a consensus of positivity.

This will be especially true for middle market business owners who make effective use of M&A over the next 12 months, either to generate capital to invest in growth, or exit their company for a return that secures their – and their family’s – financial legacy.

If your business operates in the middle market, Dr. Binkley hopes these projections prove to be true, allowing your company to grow and unlock its true potential.

Would you like to learn more about how to approach middle market M&A? Generational Equity has many articles on the subject, providing you with an insight into what you need to consider in order to sell for the optimal price. In a year such as this, information like this will prove invaluable to your business’ growth.

You can also read more of Dr. John Binkley’s views and advice on M&A, business leadership and spiritual growth on his website.