On Finance: The M&A market is “frothy”—if you can get there.
Financing seems a universal challenge for business today, regardless of geography, and as a result we’re also featuring the recap today of last week’s Manufacturing Growth & Investor Conference held in Denver for the benefit of Utah readers. Trends shaping access to capital are more sector-specific than anything. Plus, we’re bringing the event to Utah next year.
Two or three themes emerged from the discussion:
Lenders and investors are eager to offer debt and equity financing to the right companies, largely growth companies with experienced, proven management teams with a solid balance sheet. The market for M&A was described as “frothy.”
Growth companies have always had preferred access to capital, but today it remains difficult for early-stage companies to get funded. The infamous financing “Valley of Death” is deeper today than in recent memory. Friends and family can only take a start-up so far. For manufacturing entrepreneurs this means alternative funding options are more important than ever. Panelists at the Investor Conference offered great ideas on asset and purchase-order funding, family offices, convertible notes, and tactics to sway lenders and investors to your side.
Aside from early-stage woes, a strengthening economy is providing a window of opportunity for companies’ intent on raising capital in the near term. Tony Giordano, President of BKD Corporate Finance, is bullish on the next few years.
“History tells us M&A cycles are typically five to eight years,” Giordano told me. “Assuming there is not a major domestic or international event that would derail the markets, and keeping in mind the capital raise or sales process is typically a six to nine month period, we believe there is still a two to three year window for business owners to complete a transaction in a very positive environment”.
It’s also evident that most any money, debt or equity would love to see the manufacturing sector thrive. And why not? It’s brick and mortar. It’s often family-owned. It’s tangible and consumers want more things made locally.
Last month, the first-ever Marijuana Investor Conference in Denver drew over 1000 attendees. Pot’s a fad. Manufacturing’s a backbone. We need a moneyed sector. That travels. See you in Utah next year.
Bart Taylor is founder and publisher of CompanyWeek. Reach him at 303-888-2832.