Patience and persistence: the common denominators between Ironman triathlons and mergers and acquisitions. Tony Avila, Co-Founder and Managing Principal of Encore Capital Management, knows this better than anyone. In this week’s New Home Insights podcast episode, we speak with Tony about today’s M&A climate (hint: the market is more active than a triathlon athlete) and what it takes to make a deal go smoothly. Keep reading below for some of his key takeaways.
Today’s highly active market
- Tony and his team have completed seven M&A transactions so far this year.
- There are many reasons for selling a company: attractive valuations, retirement plans, investment diversification, and more.
- Today’s buyers are very diverse and include public builders, private builders, wealthy individuals, and international investors.
- Buyers are motivated by a variety of reasons as well: sales growth, trust in US real estate and law, and diversification (in product, geography, and strategy).
What makes for a smooth deal?
- Strong communication between buyers and sellers is key to ensuring a smooth deal. Avoid games of telephone and—as much as you can—lawyers.
- Faith and trust from clients also goes a long way.
- Check the ego at the door. Be willing to compromise and have faith in your people and the process.
- M&As require patience and persistence more than anything.
- Predicting the future is always a moving target, though Tony expects continued high levels of M&A activity through 2022.
- M&A activity will continue to be fueled by shortages in land, shortages in developable lots, and a need for the right people.
- Tony and his team have their eye on possible changes to the capital gains tax rates. Those changes will impact M&A strategies.
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