Generational Group

Generational Group in 2020 – A Year of Diligence

December 7, 2020 By Dr John Binkley - Generational Equity

As we approach the end of 2020, it is fair to say this is a year that will live long in our memories.

The last 12 months have presented more than their fair share of challenges and hardships, not least due to the seismic impact of the COVID-19 pandemic. Yet, through this dark cloud were many rays of light in how people responded to the hurdles of 2020 – organizations adapted, innovated and evolved with the times, allowing them to thrive in unprecedented circumstances.

This has been especially true in the world of M&A, and for us at Generational Group. Like many companies, we had to shift to quickly learn how to close deals via Zoom! But despite the disruption, both our team and our industry bounced back and found success, leaving many optimistic about deal making prospects for 2021. In fact, we anticipate that when 2020 closes, our firm will have set another record for deals closing.

For me, this reaction to the rapidly altered landscape is underpinned by a key quality – diligence.

It is one of our core values at Generational Group, emphasizing the persistence, commitment and dedication of our associates to achieve the very best results for our clients in spite of the circumstances. Never has that been more apparent than during 2020.

As has become a tradition in recent years, I’d like to share with you a recap of what’s been happening with Generational Group in the last 12 months, and why I believe our response to this year’s events has placed us with a strong, positive outlook for the future.

Achieving in M&A

We’ve witnessed this first-hand at Generational Group: 3Q 2020 was our strongest quarter ever for number of deals closed, and with our NDA (non-disclosure agreement) requests up 44% this year (so far), we anticipate buyer demand to stay high for many months to come.

Following a temporary lull in activity in the immediate aftermath of the COVID-19 pandemic, the speed and strength of the M&A industry’s comeback was highly encouraging. Indeed, deal making activity in the second-half of 2020 has been at a record pace, and is expected to persist into the new year.

Back in April of this year, we reached a major M&A milestone when we closed our 900th transaction as an organization. And with the pace of activity in the latter half of 2020, we are already knocking on the door of 1,000 completed deals – an amazing landmark in middle market M&A.

This meant a great deal to me, although not for the number itself, but for what the number represents – over 900 business owners who we have helped to secure their financial legacy and make the most of life beyond their business.

The events of 2020 also fill me with confidence that we can and will build on our Refinitiv/Thomson M&A Rankings announced at the beginning of the year, where we were positioned #1 for transactions valued up to $25m, and #2 for transactions worth up to $100m.

With all signs pointing up for our team and the deal making landscape overall as we approach 2021, I look forward to seeing what more we can achieve in the coming months, and how we as a company can continue to go the extra mile for our clients.

Pursuing growth

In a similar vein, the challenges posed by this year’s events have not hindered our ambitions as a company to continue to expand, so we can realize our aspirations and provide the most comprehensive support for our clients.

With this in mind, we added another arm to the Generational Group in 2020 – Generational Consulting Group. Consisting of former CEOs, C-suite executives and seasoned management consultants with experience across all industries, GCG creates proven strategies and tactics to enhance the growth and performance of middle market companies, with the ultimate goal of building value in each business.

This step was fundamental in us being able to deliver a fully rounded experience for our clients – maximizing the capabilities of their businesses on the journey to eventually achieving an optimal exit.

As part of this, we were excited to announce in November that we had acquired Decker Transformation Advisors, with the goal of gaining from their expertise to further enhance the offering of GCG. Prior to joining us, DTA was dedicated to transforming middle market companies by developing data-driven strategic growth plans, building high performing teams, and propelling execution to dramatically increase value.

With the addition of the highly-experienced T.D. Decker on board as the President of GCG going forward, I see incredible potential in this branch of the Generational family tree.

The expansion does not stop there however, as earlier in the year Generational Group also introduced two new offices in Charlotte, NC and Kansas City, MO, led by Jack Sluiter and Andrew Byrd respectively.

Again, this demonstrates our unending ambition to better engage with business owners across the United States by establishing locations in prominent locations across the country.

Supporting success

As an enthusiastic golfer, it’s no surprise that one of my favorite developments from 2020 was Generational Group forging a sponsorship agreement with Harry Higgs, one of the most exciting up-and-coming names on the PGA Tour.

A Dallas resident and graduate of Southern Methodist University, like my son Ryan, Higgs has already attracted a big fan following in just his second year on the Tour.

In 2020 alone, Higgs became one of only 4 PGA Tour rookies to qualify for the BMW Championship, finishing 55th overall in the FedEx Cup standings. His run towards that event was highlighted by a second-place finish in The Bermuda Championship.

Higgs’ 2020-21 season has continued to highlight his potential. Another second-place finish at The Safeway Open was capped off by a walk-off Albatross, something only a handful of golfers can boast.

With many years on tour to look forward to, the whole team at Generational is excited to see what Higgs accomplishes this season and are rooting for him the whole way!

Giving back

One of the most fulfilling aspects of our work at Generational Group is how we can continue to support our community and incredible charities, no matter the obstacles the year throws our way.

In 2020, Generational was proud to be the title sponsor of multiple fundraising golf tournaments. This included a pair of Golf Galas in the final months of the year aimed at raising funds for Here’s Life Africa, and the work they do that impacts the lives of thousands of people in Africa every single year.

In November, we once again sponsored the annual Salute to the Troops tournament, celebrating our brave service men and women, and raising money for three outstanding Veterans foundations: Feherty’s Troops First Foundation, Defenders of Freedom, and Northern Texas PGA Hope.

Finally, adapting to the current landscape, The Dallas Jingle Bell Run returned in a virtual form for 2020. As the existing environment makes it impossible to celebrate the festive season together, this alternative approach still encourages everyone to get fit and raise money for two amazing organizations: Trinity Strand Trail and The Mavs Foundation.

The Jingle Bell Run will be running until December 17, so if you’d like to sign up or donate, visit the website: https://runsignup.com/Race/TX/Dallas/DallasJingleBellRun

Looking forward

I hope you enjoyed this trip down memory lane for myself and the team at Generational Group. 2020 has carried its share of struggles, but it has also inspired many stories of hope, perseverance and accomplishment.

I am immensely proud of what our team at Generational has been able to achieve this year amid a challenging landscape, and I would like to thank the exceptional commitment shown by each and every one of our associates. Without them, the high points of this year would never have been possible.

To conclude, I wish you a wonderful holiday season, with the best of health for you and your loved ones. Together, let’s look forward to more reasons to be optimistic in 2021.

A Year for Growth – 2018 at Generational Equity

December 10, 2018 By Dr John Binkley - Generational Equity

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.

M&A Seller’s Market – 7 Reasons It’s The Strongest in Decades

June 29, 2018 By Dr John Binkley - Generational Equity

One of the abilities Dr. John Binkley considers essential for business owners looking to sell their company is determining when the M&A industry is in a seller’s market.

Why is this? A seller’s market in M&A is when conditions give more pricing power to sellers as opposed to buyers. These cycles are when the values of businesses are at their highest, with buyers willing to pay significant premiums for attractive targets.

Being able to distinguish the features of a seller’s market is a vital technique for business owners who want to maximize the offer they receive from buyers. While it is possible to achieve a great deal if you follow a proven exit planning process, the process is likely to bear more fruit during active seller’s markets.

Fortunately, now is a great time to educate yourself on the components of an M&A seller’s market – we are currently in the midst of one of the strongest seller’s market in decades. Owners preparing to exit have picked an ideal time to achieve the optimal value.

Dr. John Binkley has identified below the 7 key reasons why the current seller’s market is so powerful right now, which will hopefully result in two things:

Business owners sitting on the fence about selling will now understand why the present represents their best opportunity to maximize their return on investment.
If you’re not ready to exit yet, you’ll be aware of the factors that could add value to your business in the eyes of buyers, so you can begin to put these processes in place now.

Why 7 reasons? Well, not only is it many people’s lucky number, but it has special significance for Dr. Binkley at this moment. Generational Equity recently closed their 700^th transaction, a number unrivaled by any other M&A firm working exclusively in the middle market.

So, if you’re interested in discovering the reasons for the incredible strength of the current M&A seller’s market, whether to reinforce your decision to sell your business or help you recognize how to add value to your business, follow on below.

1) The Laws of Supply & Demand in M&A

This first one is fairly self-explanatory, but it is undoubtedly one of the most important – there are a lot of buyers out there looking for exceptional businesses to acquire. The laws of supply and demand command whether we’re in an M&A seller’s market or not, and being able to recognize when numerous transactions are going on is key to knowing it’s an ideal time to exit.

Of course, it’s not just that simple – just because professional buyers are actively looking right now doesn’t mean they will invest their money haphazardly. You should get guidance from a trusted M&A advisory firm to make sure you’re fully prepared and will catch the eyes of buyers, and right now buyers are searching for well-prepared companies with a lot of potential.

2) Growth in the Number of Private Equity firms

One of the more marked changes that Dr. John Binkley has observed in the 21^st century has been the emergence of a greater number of incredibly active Private Equity firms.

In the US alone, the number of active Private Equity firms has quadrupled from fewer than 2000 firms at the turn of the century to around 8000 last year, according to the Global Private Equity Report 2018 compiled by Bain and Company.

What does this have to do with lower middle market business sellers in the US? Well, these firms generally have an appetite to enjoy economies of scale through growth, and their preferred means of growth, certainly in recent times, has been through “add-on” business acquisitions – bolting a smaller company on in order to grow a larger holding.

In fact, Bain also revealed in their aforementioned report that add-ons as a proportion of all Private Equity transactions reached an all-time high of 50% globally in 2017. The competition to buy businesses pushes up their valuations – great news for entrepreneurs ready to sell.

3) Record Levels of Dry Powder in M&A

The amount of capital made available to Private Equity firms by their limited partners, or “dry powder” as it’s known, has reached record levels – an estimated $1.7 trillion at the end of 2017 according to Bain. This is because the limited partners (LPs) are so keen to invest that they have committed vast sums to PE firms, who then need to deploy that capital right away in order to start reaping returns.

With this capital burning holes in their pockets, PE firms are highly active in M&A markets right now. While this is fantastic news for business sellers, it also presents a challenge for individual business owners, who need their particular offering to stand out amid the maelstrom of activity.

An M&A firm like Generational Equity can help business sellers to pinpoint the areas of their business to emphasize, to ensure that they can capitalize on this rise in “dry powder.”

4) Confidence of Middle Market Business Owners

For middle market companies trading in the US right now, business is good – and they know it. Over $10 trillion is being generated annually by nearly 200,000 companies in this bracket.

Unsurprisingly, this boom has caught the attention of both private investors and growth-minded businesses seeking consolidation, leading to a middle market M&A transaction rate of around 2000 deals per quarter, according to Thomson Reuters.

Positivity among middle market business owners is lifted by the knowledge that they can grow through M&A activity, that the value of their company is likely to be very healthy compared to a few years ago, and that they can sell for a good price when they need to.

5) U.S. Tax Reform’s Impact on M&A

2017 saw tax reform legislation passed that cut the corporate tax rate down from 35% to 21% and repealed the corporate alternative minimum tax altogether, vastly reducing the amount of tax payable by U.S. businesses to the federal government.

This reform has been a double-positive for the M&A market.

On the seller’s side, a reduced tax burden has boosted profitability for their businesses, and a more profitable company is a more valuable company, contributing to this strong seller’s market.

On the buyer’s side, from conversations with corporate buyers, Dr. John Binkley has learned that much of the dividend resulting from lower tax bills is being spent on business acquisition – even more than is being spent on R&D and employee incentives.

6) Increase in Cross-Industry Transactions due to Greater Digitization

The emergence of new technologies is affecting established companies, forging new ones and forcing together previously separate arenas of industry.

In his decades spent analyzing the composition of the business landscape, Dr. John Binkley has seen the way digital technology has gone from a niche industry, to an auxiliary part of every industry, to now a driving force of many industries – and the way this movement has impacted M&A markets.

We have seen merger activity where previously disparate industries have converged thanks to new technologies. We have seen established businesses source technological capabilities through the acquisition of smaller companies. We have also seen those businesses acquire budding companies harboring technological innovations that could disrupt and threaten their interests.

This cross-industry M&A activity makes Generational Equity’s expertise across all industries a valuable tool for its clients.

7) Strategic M&A is the Fastest way to Grow a Company

Finally, while we have heard above about the economies of scale sought by Private Equity firms when bolting smaller acquisitions onto larger existing concerns, it has become increasingly evident that firms are seeing acquisition as the way to grow.

In fact, there are many benefits in growth through acquisition:

Your new business arm has a tried and tested track record, which removes the element of speculation from expansion.
You hire a skilled and cohesive workforce in one hit, removing troublesome recruitment issues.
In acquiring a rival, you may expand your operations further.
In acquiring a supplier or a customer you may benefit from supply chain efficiencies.

These benefits have not gone unnoticed by businesses who have seized upon M&A activity as a tool for growth, especially where their industry allows little scope for organic growth.

So Sell Now – But Sell How?

Hopefully these 7 tips have helped you become aware of why now is one of the strongest seller’s market in history, and which elements to look out for to spot one in the future. But knowing when to exit a business is just half the battle – you also need to know how.

Dr. John Binkley, through his leadership of Generational Equity, has worked hard to extend this knowledge to thousands of business owners each year. You can discover more about the process of exiting a company through Generational Equity’s in-depth M&A insights.