The Year of Free Cash Flow Acquisitions: Strong Selling Opportunities for Companies Under $150M
In March of 2023, Yellowstone Capital Advisors successfully closed a transaction representing a $100M BPO business, selling to a $1B BPO business. This transaction highlighted an important dynamic in the market now and in the near term future. Large strategic BPO businesses are looking to make acquisitions of companies under $150M in revenue.
2023 Market Dynamic:
Due to the macro economic conditions in 2023 involving high interest rate loans, the capital markets have become much less attractive to buyers. Private equity firms and large strategic BPO firms have become less interested in taking on debt in order to finance a transaction. Generally strategic buyers making over $1B a year in revenues actively seek transactions in the $100M-$400M range in order to grow the business. Rather than take on debt, these strategic buyers are seeking to purchase companies directly out of their free cash flow.
Opportunity for $30M to $150M Companies
This market dynamic has led large strategic BPO businesses to make smaller acquisitions of companies with revenues from $30M to $150M. While the current macro economic conditions exist, there is a valuable selling opportunity for companies in this revenue range. These strategic buyers often pay higher valuation multiples and have the organizational resources to continue on a growth trajectory through harsher economic times.
To learn more about these market dynamics or begin looking into a sale of your company please click here to schedule a meeting.