MSA Newsletter: Volume 13 | February 2022
2021's high pace for transaction activity has carried into 2022 as activity in the M&A market remains strong, regardless of the size of the transaction. We continue to see aggressive multiples driven by significant amounts of capital and lenders anxious to put money to work. The need for equity funds, family offices and private buyers to earn returns, especially with the stock market in its current downward trajectory, has maintained activity. We don't expect these trends to change this year and advise sellers who are considering retirement in the next couple of years to take advantage of the current market conditions.
Lenders are still aggressively pursuing loans needed to complete transactions. Many bank balance sheets are afloat with cash deposits, and there are too few new lending prospects to balance it out. At this point, many lenders and workout departments are working with their clients, trying to return them to the loan floor. Many of the lenders, bankruptcy attorneys and workout groups we talk to are expecting workout activity to pick up at some point this year, but we are not seeing signs of it yet. Mid-States continues to locate funding for any client or client advisor that needs assistance in locating a new lending relationship. Although not yet a significant part of our business, we have developed private lending sources that can be of assistance in tighttime frames.
As we continue to see M&A activity driving the markets, we thought it a good time to update our newsletter on Letters of Intent, their purpose and how to effectively use them to achieve transaction goals. LOIs are very effective tools when used properly and our newsletter article this month focuses on the potential pitfalls and how to mitigate the risks involved with any LOI. We believe this quick read can help our network reach their transaction goals more effectively.
As always, if you are interested in learning more about this volume's content or if we can help you or a client in any way, please feel free to reach out to one of our team members.
The Mid-States Team