In this episode, David and Eric will be discussing if now is a good time to start thinking about buying that competitor you’ve been thinking about. This episode builds upon our previous series on valuation and the current economic situation.
Today we are seeing more mainstream articles about how we are either already in a recession or getting ready to go into a recession. To speak the language of our previous episodes on valuation, there is higher risk to future cash flows which will drive valuations down.
From a buyer’s perspective, inputs such as rising interest rates and higher expected return on equity affect their perceptions of value. If there is an investor who wants to have the same risk adjusted rate of return that they had in the past – they will pay saliently less today than they might have some months ago or a year ago. Depending on if you’re a buyer or seller – this starts to inform your growth and exit timing strategies.
If a recession does happen in 2023 organic growth could be more difficult. You might be able to grow anyway and one way to growth through a recession is acquisition. Listen as we dive in.
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