M&A Remains Strong After a Record-Setting Year


Last month, REAG Founding Partner Scott Mashuda and Kyle Madden of KLH Capital hosted their bi-annual discussion about the current state of mergers and acquisitions in the lower-middle market.

We’ll be releasing a series of video clips from the webinar, but in the meantime, business owners should know this: It’s go time

If you’ve been listening to the news outlets, you probably aren’t feeling overly confident in the public markets. However, lower middle market M&A is still incredibly strong, even after reaching an all-time high last year.

What’s driving this trend? Demand.

Demand for lower-middle market businesses remains strong because there’s still a surplus of capital that needs to be invested. Since markets are driven by supply and demand, the current state of the lower middle market is a true testament to this concept.

Will there be enough supply to satisfy demand? Maybe.

Though some sellers are slow to get started amid fears of a recession, sell-side conversations are happening frequently. While headwinds are out there, good companies are still commanding above average multiples.

Valuations will depend on a multitude of factors, as they always have—where a business stands in the supply chain, what markets they serve, demand in the market, customer concentration and whether the company’s EBITDA is increasing or decreasing. The real questions that buyers are trying to decipher: What’s driving value, and is it sustainable? Buyers want a business model that can carry on into the future and are willing to pay above average multiples to own these businesses.

We all know M&A is seasonal. As summer ends, the lower middle market heats up. If you’re thinking about selling, are tired of reinvesting your own money back into the business, have an expansion idea that needs funding to execute, or you just don’t want to go through another downturn, it’s full speed ahead!

Contact us to talk about how REAG can help.