Looking on the Sunny Side at Equipment Finance M&As

Most of us were happy to wave 2021 goodbye. Continuing Covid, supply chain issues, inflation – need we say more? Turns out it was a strong year for merger and acquisition activity in the US equipment finance industry, particularly the second half, says James (Jim) Jackson in the Monitor’s second issue of 2022. His article discusses last year’s deals, current conditions and potential risks for hints of what’s ahead.

M&A prospects look good overall in 2022 – so far. Headwinds include supply chain challenges, inflation, interest rates and fallout from Putin’s invasion of Ukraine, the latter of which developed after Jackson’s article deadline. But many of the economic factors that made 2021 an active year remain present in 2022.

“M&A activity and company valuations are driven in large part by levels of liquidity and access to credit, portfolio quality, stock market trends, interest rates, unemployment rates, political uncertainty and business confidence levels. The favorable economic environment indicates we should continue to benefit from a robust M&A market at least through the end of 2022,” he writes.

Jackson is co-CEO of The Alta Group, leader of the firm’s merger and acquisition advisory practice and, in his industry volunteer capacity, serves as president of the National Equipment Finance Association (NEFA).  He has reported annually on M&As for many years for the Monitor.

It’s important to read his article if you are planning for an acquisition or merger or might be affected by one in the future. Early planning leads to better outcomes, he notes.

“On the sell side, many independent finance companies in the industry have aging owners who are beginning to focus on estate planning and transitioning their businesses to successor firms. Most of these owners understand they need to start the sale process early, regardless of their succession plan, as they will likely need to continue working, at least part-time, after the sale to successfully transition the business and achieve the optimal sale price for their company,” Jackson writes.

“Given the strong economic environment, many owners are open to discussions with potential acquisition partners, as it is uncertain when this favorable cycle will come to an end.”