Current Acquisitions Focus on Top Line Revenue Growth

Two recently published news reports are reflective of trends we have seen in the market, both of which highlight the focus on top line revenue growth and reduced hiring.

First, a recent survey of business owners by the Wall Street Journal found that half of small business owners expect that the country will not avoid a tax increase—the so-called “fiscal cliff”—unless Congress and the President agree on a new deficit-reduction plan. Many fear  an end to the 12 to 24 months it took to rebuild revenues since the recession ended.

Meanwhile, a second report indicates that many small businesses cut back on hiring and have lowered their staffing plans, according to The National Federation of Independent Business, a small-business trade group. This observation is supported by PNC Financial Services Group, indicating that less than a quarter of the surveyed companies expect to add new employees over the next six months.

“The trends described in these two reports are somewhat reflected in our business,” says Achim Neumann, President of A Neumann & Associates, New Jersey. ”Businesses that lend themselves to consolidation with larger firms find more interested buyers than those with lesser economies of scale; in short, the growth of the top line is a key driver.”

As an example, most recently the firm accepted an engagement with a leading logistics operation in New Jersey searching for an investor or an outright sale. “The interest level was absolutely fantastic,” says Gary Herviou, Director Marketing, Central New Jersey,” we have had over 50 inquiries within a time span of just ten days.”

Frank Arcoleo, newly appointed Director Marketing, Eastern Pennsylvania, adds, “Stand-alone retail businesses with limited upside potential in an acquisition, and even restaurants, have experienced a considerable decline in inquiries by potential buyers over the past nine months.”

A Neumann & Associates has taken the opportunity to expand its consulting operations by providing various business owners with value-added services, introducing specific industry analysis and expanded valuation services. As Michael Gersten, representing the firm in Northern NJ and Southern NY State, points out, “We recently initiated the valuation of an advertising publishing business, with the folks having gone through serious consideration before moving forward— and already, we have interested investors.”

Despite the looming fiscal cliff and limited hiring activities, eventually such challenges will be resolved. “Business owners who have completed the valuation process, and who have a business ready to be sold, will be in a considerably better position than owners who are only starting to think about a sale,” remarks Steve Wrubleski, Director of Marketing for South NJ and Philadelphia. “And in light of that fact that many business owners have held back on retiring for 3 to 4 years, exceeding the typical ‘retirement age’ of 70 to 75, we have a significant backlog of businesses getting ready to come onto the market.”

See our latest Hotsheet listing of available businesses