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A Time to Sell

By: George Spilka
Posted: June 7, 2011, from the June 2011 issue of GCI Magazine.

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5. Around the end of 2010, acquirers began to aggressively pursue deals.

These factors combined strongly suggest that those interested in selling their companies within the next seven years should seriously consider selling them during the latter part of 2011 or 2012.

Factors in 2014 and Later

Beginning in 2014, the intermediate and long-term economic outlook gets pretty murky. It is not inconceivable that the economy could stay strong during 2014 and 2015; however, a number of factors give off warning signals that trouble could be on the horizon, which could affect these and/or 2016 and beyond. These factors could negatively impact middle market deal pricing and activity—possibly significantly. Some of these concerns, which could have a major negative impact on the world economy, are:

1. The condition of the credit markets, especially in Europe, could be an intermediate to long-term financial problem.

2. Major issues are impacting the Chinese economy and banking system—including the Chinese Central Bank increasing the “benchmark” lending rate and the reserve requirements for the commercial banks in an attempt to reduce an increasing inflation rate. Potentially, these could have a negative impact on the Chinese economy. And as the Chinese economy is one of the most dynamic and important economies in the world, a negative impact on it will likely have global consequences.