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  • Writer's pictureMid-States Advisors

The Importance of Transaction Structuring for Lower Middle Market Businesses




As we get ready to enter the early days of Spring here in Michigan, we've already had our first 70-degree day. And from what we are seeing from an activity perspective, the M&A markets should be just as hot.


We are seeing a significant pickup in incoming requests for buy-side, sell-side, and financing services. The quality of the deal flow continues to improve, and we hear the same from the acquirers with whom we regularly communicate. The 2021 and early 2022 runs on the acquisition market resulted in many of the "quality deals" being acquired, and 2023 was left with more challenging opportunities, leading many buyers to stay on the sidelines, compounded by higher interest rates and recession concerns. 2024 appears to be the end of those sentiments as we are seeing a very hungry market. 


We say it in nearly every newsletter we send out: MONEY HAS TO BE PUT TO WORK!


From what we are hearing from our friends in the lending world, pipelines are starting to look pretty robust. While rates have yet to drop, confidence in the economy remains high and it is only a matter of time until rates do drop, even though some of the data is showing otherwise. The Fed maintains that we will see rate drops in 2024. It is an election year. We still believe a rate drop will hit in Q2 and likely another in Q3 but nothing is guaranteed in this world.


In this month's newsletter, we discuss the importance of appropriate transaction structuring when selling a lower middle market business. Without an experienced transaction team assisting in structuring, the Seller or Buyer can be left with serious post-closing problems. It is a complicated process and if you've never been through it before you may have no idea where to start. The Devil is in the details and we pride ourselves in making sure our clients are working with the appropriate team members to get the exact result they are expecting.


Feel free to reach out to us at any time to talk about this article or to discuss a potential transaction. We look forward to hearing from you.


Joseph P. Alam III

Managing Director

(313) 670-5713

JP3@MidStatesAdvisors.com

Joe Alam Sr.

Senior Advisor

(313) 215-1700

JPA@MidStatesAdvisors.com


Fadi Sadik

Analyst

(248) 808-1055

FS@MidStatesAdvisors.com


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