2021 was a great time to sell, and the market continues to be strong is 2022. But no one knows how quickly things will start to slow down. So while the window of opportunity has not closed yet, you don’t want to wait until it does, and you want to make sure to work with the right deal team that has the resources to complete a deal efficiently before any more market changes happen. It is absolutely still a hot market to sell your business!
2021 Recap
M&A activity was moving at a record pace in 2021, thanks to economic recovery, a strong stock market, low-interest rates, and available financing.
While the COVID-19 pandemic caused deal activity to slow down in 2020, it also forced sellers and buyers to adapt, which turned out to be positive. It’s hard to believe that 2022 will be the third year of the ‘pandemic era’, but business acquisition momentum is expected to move forward at the same pace, barring any unforeseen circumstances, such as a resurge in COVID.
2022 Moving Forward
While you haven’t missed out on this hot market yet, you need to keep in mind that significant market changes are expected in the near future. One of the fundamental changes is the rising interest rates. Interest rates have already taken one hike this year, and buyers are trying to close and fund deals quickly in 2022 before the rest of the expected hikes to occur.
Many sellers are moving quickly to get their companies on the market this year, not just because it is a seller’s market. Business owners in the U.S. are trying to sell before potential corporate and capital gains tax increases could be enacted in 2022 by the Biden administration. The proposed plan raises the corporate tax rate from 21% to 28%, which would likely make main street and mid-market deals more expensive. The Biden plan also aims to restore the top individual federal income tax rate from 37% to 39.6% on those earning more than $400,000 per year.Our conclusion, 2021 was a strong market for business owners looking to sell their companies. The market remains ideal and will do so as we move along in 2022. As we are in the middle of this year, there is no better time to consider putting your business on the market.
Our conclusion, 2021 was a strong market for business owners looking to sell their companies. The market remains ideal and will do so as we move along in 2022. As we are in the middle of this year, there is no better time to consider putting your business on the market.
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