Unleashing Opportunities – Highlights from ACG’s Northwest Middle Market Growth Conference
By: Franklin Vazquez
This year Seattle welcomed back the 2022 edition of Northwest Middle Market Growth Conference. The conference was designed not only to provide growth opportunities to middle market business in the Northwest but also to re-connect professionals and enhance relationships.
The conference kicked off with networking opportunities and was followed by a market update live session featuring panelists that lead in the M&A and leveraged finance marketplace including CLA’s own Tyler Lounsbery, Principal. Below are some of the highlights from the conference.
- Deal Flow – Although there has been a positive post-pandemic trend in deal volume, there appears to be “noise” during the due diligence stage that has slowed down the speed of the deal making process. During the current high inflationary period there is more tension in price negotiations and additional challenges in allocating risks. Buyers and sellers are more sophisticated and willing to pay or charge a premium to mitigate risks. A common post-closing issue is that buyers do not properly prepare for the financial reporting function, which is in part due to a labor shortage.
- Lending – Financial institutions are experiencing an increase in lending activity. Businesses are looking for additional debt options as the excess in cash received from the government during the pandemic has depleted. Leverage has increased and the lending market continues to be competitive while credit performance remains stable. However, due to the current state of the economy, lenders are looking to gain confidence in the borrower’s management team to forecast and prepare for the future.
- Outlook – In the existing environment there is uncertainty in the market and opportunities for dealmaking could be dampened. However, M&A professionals remain confident that although a storm seems to be coming, the consumer outlook appears strong and there is no reason to be alarmed. Difficult price negotiations and a shortage of resources are expected.
- Players – In a deal transaction, many service providers may be needed for due diligence including engineers, attorneys, and accountants. It is key for dealmakers to reference check service providers and get to know whom they will be working with. This practice will ensure that potential problems encountered during the transaction are analyzed and resolved timely.
Key takeaway
Despite recent challenges in the economy, the M&A market is strong. Dealmakers need to quickly adapt as current events continue to unfold.
Professionals that attended the 2022 Northwest Middle Market Growth Conference were provided with current and relevant information for development opportunities in the region and the chance to meet and greet individuals from a wide range of middle-market businesses, bringing us together in the common goal of growth.
How CLA can help
CLA is here to help you analyze your M&A transaction during these complex times. We can assist you throughout each step of the due diligence process and help achieve the best outcome for your deal.
Craig Arends is a principal at CLA and is the managing principal of CLA's private equity practice. Craig brings a concentration of experience in providing accounting and transaction structuring advice for leveraged recapitalizations, purchase accounting and SEC reporting, assessing quality of earnings, and GAAP accounting. He has far-reaching experience with critiquing financial models and reviewing target companies' financial performance to identify cost reductions and/or operating efficiencies Craig has more than 30 years of experience in public accounting serving public companies, private equity groups, and companies, including a term as principal in charge of a Big Four Capital Markets Group in Moscow, Russia. He has led financial accounting due diligence projects for private equity investor groups and venture capital funds, primarily in the technology, communications, and manufacturing industries, as well as assisting with Foreign Corrupt Practice Act matters ranging from investigation of payments made, validation of compliance with corporate policies, and review of proposed transactions to ensure compliance. When not working, Craig enjoys watching any sports, but his most favorite are baseball, football and soccer.
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