Deb Douglas, Managing Director
One of the most common inquiries we hear from business owners today is about what industries are really “HOT” in this market, and most in demand by buyers. It does change and evolve from time to time, so we periodically try to take the market “pulse” by studying recent buyer inquiry records to see what is currently at the top of buyer lists. We talk to new prospective buyers literally every day of the week, and we listen and learn. A dozen of the most popular industry segments of recent times are as follows:
Health care device, supply, or equipment manufacturers-
As the world evolves, human life expectancies are getting longer every decade. At the same time, technical developments are making more and better devices available to sustain and nourish such longer lives. There are few industries with greater certainty for continued success over the coming years.
Plastics manufacturers –
As light-weight, plastic, ever-stronger materials become an increasingly staple fabric of every aspect of life, continued proliferation of newer and wider use for plastic materials appears to be a given. Proficient manufacturing capabilities are clearly needed, and clearly evolving to ever higher use in the future.
Pet product companies –
The pet product industry is one of the few industries in the US that has been ruled to be “recession-proof” over the past several decades. As child-free baby boomers ease into retirement, few decrease the number of pets per household, and almost all spend increased amounts per pet.
Safety product companies –
Developed countries have followed continuous paths all over the world, to enhance safety for workers as they develop. Additionally, the range and the breadth of technical capabilities for safety related products continues to grow as populations mature. Increased breadth in a growing economy bodes well, the world over.
Corporate service providers (ie. outsourced or managed service providers) –
In the past few decades, the offerings of outsourced service providers have expanded enormously. From providers of leased employee base, to complex customer billing services, and onward, today we see corporate providers of almost every aspect of a for-profit company’s existence offered today by “outside” providers. Margins can be strong for quality expertise.
Instrumentation products –
One of the areas perceived by buyers as wonderfully “nichy” is the increasingly complex area of instrumentation products. Whether such products measure air density at 5,000 foot altitudes, or chemical concentration in micro-sized particles, such devices almost always utilize specialized technical capabilities, unique to the application at hand.
Pharmaceutical producers –
New medical uses expand on almost a daily basis for a wide range of substances. As research lends knowledge for newfound uses of a variety of organic and inorganic chemicals, new combinations evolve and become mainstream at a rapid pace. Further, the increased longevity of the population and expansion of expertise within medical provider roles, nurture growth for new pharmaceuticals.
Packaging providers –
With increasingly complex product attributes to protect and make mobile, an ever wider array of product packaging alternatives is available. Providers with science and technology to offer product protection PLUS attractive marketing visibility are hotly desired. The leading edge provider of desirable packaging has the tremendous growth opportunity most loved by buyers.
Chemical companies –
There are literally hundreds of buyers in the US today with a near-number-one desire for innovative and resourceful chemical providers. Customers span a wide range of possible users, technical requirements offer competitive shelter, and industry and creativity are quickly rewarded.
Distributors –
The USA today has a steadily increasing percentage of distributors among its corporate entities. Even where low-skilled production may have evolved to offshore sites, the key distributors of related product are often left in the US. Distributors in particular, who have an advantaged position in product range – often due to specialized industry knowledge or proprietary relationships with key suppliers – are at an advantage, and will grow as a result.
Consumer product companies –
A wide and varied mix of consumer product companies evolve year after year in the US. Many such products may go on to experience world-wide success and popularity. Companies which offer the new or the technically superior entry to the market can boast double-digit growth, and potentially far superior profits, if patent or knowledge-protected from competition.
Health care service companies –
Health service care companies, particularly those in service to the aged or to emerging health trend issues, are becoming increasingly complex, and growing with leaps and bounds with demographic upticks. Home health services flourish. Housing for the elderly offers ever-wider alternatives. Quality management for a growing population in need pays business dividends.
Incoming inquiries for these industries are frequent, and buyer pricing multiples are typically strong. Some of these we may hear of more often because we have represented a range of sellers in these segments, so buyers think of us as they look. However, in almost all of the above-listed segments, we know enough detail about specific recent transactions to say with confidence that these areas are “hot” for 2016.
While this is certainly not an all-inclusive list, it does hit the ones we most commonly hear buyers discuss. Generally, buyers become enamored with areas where they commonly believe:
Growth is likely to continue
Profitability is above average
Proprietary protections are strong
Industries are not already dominated by a handful of very large providers
These elements make buyers readily able to capitalize on potential improvement as they “professionalize” resources within the company. They also may be industries where businesses are likely to seek combination, to strengthen their resources for growth. Plus, industries not clearly dominated by a few big players tend to have a more diverse range of mid-sized players, who may be good targets for add-on acquisitions in the future.
If you or your business connections are squarely in one of these segments, timing is good for consideration of possible sale. If you’d like further information on what we’ve learned about patterns and trends for these industries, don’t hesitate to call. Homerun pricing is always exciting, and we’d love to talk with you about where we see it!
Debbie can be reached at ddouglas@douglasgroup.net or 314-991-5150
