Quality deal flow is among the top concerns for M&A advisors. A recent blog posted by Private Equity Information offers 8 key attributes of “quality deals.”
- Growing revenue streams, (preferably recurring)
- Stable, increasing cash flow
- Scalable
- Non-cyclical products or services
- Low CapEx required to achieve growth
- An excellent management team
- A diverse customer base
- A motivated seller
“With corporate valuations at historic highs (in 2018), business sellers operating “quality” businesses tend to have the mindset that they should hold longer,” PEI founder Andy Jones observes. “They delay an exit because cash flows are good, and the company continues to grow.”
But consider this: Delaying an exit may place owners in a flood of Boomers with the same idea. Meanwhile, valuations are currently at historic highs.
Read more here.