The Transition Companies News

The Transition Companies (“TTC”) has held yet another successful International Buyers Forum (the “Forum”). This time the Forum was held at the Hyatt Regency hotel in Toronto, Canada on September 17, 2009.

We were pleased to confirm that both strategic corporate buyers and private equity and investment groups are still very active in the market place. Good fundamental business models are in demand selling with no appreciable change in value. Companies performing at a lower level than recent years, but still comparable to “pre bubble” levels, are also trading at similar values.

Some of the feedback from the market was:

• Strategic buyers are more active than financial buyers right now. Corporate cash reserves are high and buyers that depend less on borrowing to leverage M&A transactions are better positioned. However, financial buyers that depend less on borrowing are still active, yet more cautious.
• Buyers feel the economy is on the road to recovery. Most buyers believe the economy is recovering and they are positioning themselves to be more active in Q1 and Q2 2010.
• Most buyers believe that interest rates will increase in 2010. Therefore, the balance is to acquire companies as the economy improves but to do so before interest rates increase.
• Perhaps the most interesting feedback surrounded The Transition Companies’ Business Optimization Practice Group (“BOPG”). TTC’s BOPG puts a professional on site with a business owner to roll up their sleeves and make the changes needed to increase the company’s performance and its market value.
• Most buyers felt that the changes made to a company by TTC’s BOPG resulted in a more stable and sustainable growth platform in that company. Therefore, buyers feel less risk and will pay more for a company that has been through TTC’s Business Optimization services.

While TTC’s business model has been successful in this market and positive feedback has been provided in many “one off” situations, in this case, the response and feedback on TTC’s BOPG was overwhelmingly positive in a mass buyer forum.

Strategic buyers expressed the need to grow through acquisition now more than ever. Simply put; organic growth is too hard in the current economic environment rendering growth through acquisition more desirable than ever.

The information and market feedback exchanged at these Forums is invaluable. Those in attendance found the discussions thought provoking and had the opportunity to discuss their specific acquisition criteria with our M&A professionals who were able to provide our client companies with quality face time with professional buyers and investors who know their industries inside and out.

One important lesson learned for selling companies; commit and be prepared sooner than you think.