650-730-9848 brian@sullivanco.net

The number of announced acquisitions of privately owned companies increased from 7,793 in 2017 to 8,761 in 2018 (a 12% increase), reveals the soon-to-be-released 2019 Mergerstat Review. The purchase of privately held companies is a significant component of merger and acquisition activity, the report points out.

Acquisitions of Privately Owned Companies 2009-2018

  Number of Acquisitions % of Acquisition Activity Total Dollar Value Offered (Millions)
2009 4,483 43% 81,087.2
2010 5,997 57% 145,799.8
2011 6,607 63% 285,112.3
2012 6,677 63% 235,703.8
2013 6,232 59% 188,856.1
2014 8,156 77% 362,167.2
2015 8,792 83% 334,861.5
2016 8,315 79% 385,652.9
2017 7,793 74% 378,425.4
2018 8,761 83% 339,182.8

(Source: FactSet Mergerstat Review 2019)

Key drivers: Private firms are being acquired for several reasons. The owner lacks an heir to take over the business and, nearing retirement, needs to sell to achieve liquidity for investment diversification and estate tax purposes. Another common reason for sale is growing pains. Increasing demand for the company’s products or services puts pressure on the firm to become more sophisticated and efficient in its operations. To fulfill these demands, the owner/entrepreneur sells the business to obtain needed financial resources for expansion.