Searchers: How has the economic outlook changed your search?

lender profile

November 16, 2022

by a lender from Baylor University - Hankamer School of Business in Houston, TX, USA

The list of economic headwinds is long -- inflation, rising rates, supply chain woes, lenders pulling back, etc.

- Has your thinking (or approach) changed?
- Have you revised your timeline/expectations?

Curious how this has impacted the community.

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commentor profile
Reply by a searcher
from Harvard University in Boston, MA, USA
As a prospective searcher planning to launch in ~7 months, also very curious about this. For what it's worth, I view the changing economic outlook as somewhat of a wash when it comes to search. Inflation and expensive debt are certainly cons (and would probably lead me to evaluate deals under the assumption of lower-than-usual leverage); however, in theory a down market should also lead to lower valuations over time, and may also push more sellers into the market (particularly those very close to retirement who don't want to wait out a potentially extended recession).

From a psychological perspective, I'd also rather evaluate acquisitions with the expectation that a recession is imminent instead of acquiring and then being surprised when the economic outlook changes a year later. So the pros and cons seem about equal in my mind.
commentor profile
Reply by a searcher
from Washington and Lee University in Cambridge, MA, USA
We've become more focused on how target companies performed in past recessions and are less likely to take a risk on an acquisition with high investment risk and/or are waiting to acquire until after the recession fully hits and multiples decline. Regardless, it's still a great time to search and some of the best search outcomes have occurred for those who searched during the last recession. If you're debating searching now vs waiting, I'd still say search now.
commentor profile
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