Prepare for Bullish Market

Confidence among midmarket executives is up and market conditions still seem to favor a buyers’ market and more companies are engaged in actively seeking acquisitions and raising capital. That also means that fewer companies are sitting on the sidelines, increasing the competitive edge significantly.

Major reasons for buying are:

  1. Increase Revenue
  2. Meet market expectations better (especially lower midmarket)
  3. Expand geographically within the US

According to a Deloitte Survey (Dec 2014), the confidence among midmarket executives is highest since 2011. They are eying expansion opportunities and some are contemplating an IPO, an increase of 10% within the past 6 months. The other interesting factor according to this report, is that revenue, profits and productivity are all up and in much better standing than a year ago. This gives the companies a stronger foundation and greater confidence to expand.

Organic growth for a midmarket business continues to be harder to achieve, so how will you evaluate your business? Do you show strong fundamentals? If not, an important step for you is to pay attention to your operational profitability before venturing out to make an acquisition. Focusing on both top and bottom line growth is essential and can be achieved simultaneously.

The other good news is that executives feel more confident about raising capital (2015 Citizens Financial Group) for the following reasons:

  1. Capital expenditures (51%)
  2. Acquisitions (39%)
  3. New products and services (33%)

The majority are considering debt financing, especially true in the lower middle market. The larger midmarket companies are contemplating private equity at a higher rate than the smaller ones ($5-$25M in annual revenue).

So what does this all tell you? All this activity in the midmarket is telling us that competition is real. If you want to compete in this active market, you must stay on top of the game.

For your business to reach its next stage, here are some next steps to consider:

  1. Assess your business today
  • What are your strengths and what are your weaknesses in the market place?
  • Where are your inefficiencies and how can you fix them?
  • What is holding you back from expanding the business? Systems, Cash or People?
  • What is your timeframe to fix or change things all together?
  1. What are your expansion opportunities?
  • New products and services
  • New markets
  1. What path will you take and how will you evaluate the opportunity?

    • Acquisition or Management Buyout
    • Strategic Partnerships
    • Develop your own products and services
    • Opportunity cost

Knowing how to prioritize and develop a Strategic Plan so you remain competitive and are not left behind, will be of critical importance. For certain, reach out to the right advisors and experts who can support you and lead you in the right direction.

“The mid-market will undoubtedly play a key role in sustaining the economy’s upward trajectory moving forward,” adds Roger Nanney, leader of Deloitte Growth Enterprise Services. “As these companies move on to the next stage of growth, it will be critical for them to prioritize investments and focus on areas that are most likely to fuel growth.”

Together, let’s determine the most likely areas to FUEL YOUR GROWTH. The NSS team is passionate about helping businesses get to the next stage. Call us to start the conversation at 617-449-7728

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