New M&A Reports Forecast Slowdown In Startup Funding And Also In Business Acquisitions

Tuesday, October 09, 2012 08:48
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New M&A Reports Forecast Slowdown In Startup Funding And Also In Business Acquisitions

Tags: business owners | economy | M&A

A weekend report from Ernst & Young over the weekend echoed findings from a report issued by Dow Jones VentureSource last week noting a slowdown in acquisitions over the last quarter.

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Deals were down 32% over the third quarter from third quarter 2011. These reports could dampen investor enthusiasm since investors look to make significant gains when private companies either go public or are sold.
 
The Ernst & Young Global Confidence Barometer said that only 25% of executives polled expect to pursue an acquisition. This is the most pessimistic reading since the survey was started in 2009.
 
Investors have become more risk averse since the 2008 crisis so the appetite for new ventures or the desire to sell companies has diminished.
 
Concerns about softening economies across the globe—primarily in Europe and in China—are to blame for the pullback in interest. This could make it more difficult for startups to raise needed funding for launching their businesses.
 
The Ernst & Young report points to slowed activity for a number of years to come, indicating that private business owners wishing to cash out may want to do so sooner rather than later.

 

 

This also may have an effect on your clients' succession plans. Client expectations for selling their businesses may have to be rethought as a result. Startup growth is also a consideration in new job creation.

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