I think it is time to weigh in on Obamacare and its impact on the small business merger & acquisition market. Yesterday, I stirred up a bit of a hornet’s nest by posting a link to an article from Inc. magazine entitled “Six Ways Obamacare is Good For Your Business.” Apparently, not very many people are buying that.
So I asked myself, what real impact will Obamacare have on the small business M&A market? I have mostly viewed it as one of the elements of uncertainty that have been a downer for a while, in between fiscal cliffs, sequesters, debt ceilings and threats of government shut-downs. But the reality is that there are two big impacts (among some others) that Obamacare will have on M&A. First M&A valuations are definitely related to cash flow expectations and higher costs will be a negative on valuations. Second, to the extent that potential buyers are hard hit by increased costs, they may be less likely to pursue M&A opportunities aggressively. Those are both theoretical right now and it is hard to analyze what they might mean.
One thing I do know is that, as with other business challenges, those business owners who understand their own situations and respond accordingly will be better positioned in the M&A market, whether as sellers or buyers.
Here are links to some resources that might be helpful:
The Small Business Administration’s website has an analysis of key provisions of the Patient Protection and Affordable Care Act (the Affordable Care Act, sometimes called Obamacare) with separate information for the self-employed, those with fewer than 25 employees, those with fewer than 50 employees and those with 50 or more employees. Here’s a link.
Inc. Magazine has published “Four Strategies for the Coming of Obamacare” which analyzes the impact on four different small businesses, the likely impacts, negative and positive, and the four companies’ strategies for dealing with it.
So have at it. We would welcome your comments as to how you see Obamacare affecting your business and how you plan to deal with it.