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Speaker 1: Global business news twenty four hours a day. If Bloomberg

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Speaker 1: This is a Bloomberg Business Flash Strom Bloomberg World Headquarters.

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Speaker 1: I'm Charlie Pellett. Stocks are trading higher and this update

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Speaker 1: brought to you by Pershing Insight twenty sixteen, the must

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Speaker 1: attend event for advisors less than two weeks away June

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Speaker 1: S I T E twenty sixteen dot com. Now over

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Speaker 1: the first word breaking news desk for today's afternoon call,

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Speaker 1: and here he is Bill Maloney. Good afternoon, Charlie. Another

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Speaker 1: day of games for US stocks. Dad is currently hired

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Speaker 1: by A hundred and fifty four points. SUPs gained fifteen

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Speaker 1: and NAZAC rises thirty. Small cap six hundred games three points,

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Speaker 1: and the US ten yield at one point eight seven

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Speaker 1: per cent. Not out of ten sub sectors are higher,

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Speaker 1: led by games and energy materials and the financials only

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Speaker 1: utilities declined, Doubt Transports rise fifty six and as a

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Speaker 1: biotechs game twenty two and the VIX is lower by

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Speaker 1: three percent. Down leads to the upside included Goldman, Sachs, IBM,

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Speaker 1: and Caterpillar, while Nike led to the downside. Apple approached

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Speaker 1: a hundred hours of share. Computer Science has gained as

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Speaker 1: much as forty to our sixteen year high, well Ali

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Speaker 1: Baba Felle as much as seven point eight percent. The

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Speaker 1: company is facing an SEC investigation over its accounting practices.

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Speaker 1: After the belt Tonight look for earnings from HP and

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Speaker 1: Williams Sonoma Costco reports late tonight live from the first

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Speaker 1: breaking news to ascom Bill Maloney. Charlie all right, thank

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Speaker 1: you very much, Bill Maloney, and here live breaking news

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Speaker 1: over your Bloomberg Times Squawk s Q. You a w

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Speaker 1: K on your terminal. I'm Charlie Palleton. That's a Bloomberg

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Speaker 1: business flash. You're listening to taking stock with bim Box

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Speaker 1: and death Lenas on Bloomberg Radio. We are broadcasting live

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Speaker 1: from the Bloomberg Breakaway. Some of it is a two

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Speaker 1: day conference that brings together a select group of executives,

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Speaker 1: all who lead high growth companies. And you know, one

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Speaker 1: of the things that happens if you lead a high

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Speaker 1: growth companies, perhaps someone would like to acquire you buying

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Speaker 1: the growth instead of building it themselves. Well, here to

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Speaker 1: tell us more is Beatrice Mitchell, co founder and managing

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Speaker 1: director of Sperry Mitchell and Company, and she joins us, now,

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Speaker 1: thank you very much for being here. Beatrice, thank you

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Speaker 1: for having me. You know I note also that you

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Speaker 1: are the co author of the book entitled The Complete

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Speaker 1: Guide to Selling Your Business, and it's also been published

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Speaker 1: in Chinese recently. Tell us a little bit about how

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Speaker 1: you look at the middle, the small the mid market

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Speaker 1: and this tension that exists. It's their company, they built it,

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Speaker 1: but also there might be someone out there that wants

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Speaker 1: to buy it. Well, the tension probably most likely what

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Speaker 1: you see them most of is somebody who says, I'm

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Speaker 1: really happy doing what I'm doing. I'm sixty, I'm sixty two,

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Speaker 1: maybe i'm fifty five, and I just I really don't

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Speaker 1: want to give it up, but I know I should.

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Speaker 1: I should start to think about the fact that I'm

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Speaker 1: probably not growing the company as as much as I

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Speaker 1: should because I've got too much money tied up in it,

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Speaker 1: and so I'm I'm feeling very risk It feels very

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Speaker 1: risky to me to double in size, so I won't

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Speaker 1: do that, and I know that's bad. Um Or I

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Speaker 1: realized I should be letting a second tier management team

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Speaker 1: come in, but I'm sort of a control freak, most

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Speaker 1: of them are, and so I don't want to let

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Speaker 1: that happen. That's going to hold the company back. Or

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Speaker 1: I'm worried that I've had a health scare and I

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Speaker 1: don't really want to face that, but I know that

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Speaker 1: I should start to think about selling. So that's those

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Speaker 1: are the sort of tensions or has so much tensions,

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Speaker 1: but issues that we patterns that are repeated over and

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Speaker 1: over again. So what is going on right now? I

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Speaker 1: love this space, this small and medium sized enterprise space

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Speaker 1: because I'm a macro eco kind of person, but I

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Speaker 1: think it's so rich in terms of getting an understanding

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Speaker 1: if it's really going on with businesses. What are you

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Speaker 1: seeing right now? What's happening, what's not happening? Well, right now,

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Speaker 1: the number of deals being done UH is down significantly down.

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Speaker 1: So last quarter first quarter of sixteen, there were three

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Speaker 1: d and thirty deals done in what we call the

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Speaker 1: mid market space, which is companies that that will trade

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Speaker 1: for anywhere from ten million to a hundred billion. That's

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Speaker 1: a I know it's a big number, but that that

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Speaker 1: is how it's defined, or most people define it. Um

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Speaker 1: and uh. To put this in perspective, the the first

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Speaker 1: quarter of fifteen, there were four under ninety three deals

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Speaker 1: done and to really put in perspective and oh seven

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Speaker 1: there were six dred and seventy one deals done. So

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Speaker 1: there's anyway the last this year versus last year, there's

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Speaker 1: definitely going to be a decline. There's there are less

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Speaker 1: companies for sale, less deals getting done. Why not for

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Speaker 1: lack of finance? That's what people this is the knee

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Speaker 1: jerk reaction is though the banks aren't financing, That's not

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Speaker 1: really what's going on. There's plenty of money out there.

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Speaker 1: There's there are um lots of non bank lenders like

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Speaker 1: I'm just you know, goal of our antiers that are

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Speaker 1: very aggressive and happy to lend into this market. So

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Speaker 1: it's not lack of fantasy. It's really lack of of supply.

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Speaker 1: And I couldn't tell you exactly why there's lack of supply.

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Speaker 1: I think maybe a lot of companies were sold last year. Um.

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Speaker 1: What I find is that sellers are much more sophisticated

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Speaker 1: than they used to be. When I say to somebody

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Speaker 1: that I first met, So tell me what your ebit

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Speaker 1: dot is and I expect them to then say what's that?

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Speaker 1: They all say, yeah, and exactly what that is. And

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Speaker 1: and these are what my ad backs are. I mean,

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Speaker 1: they're they're one step ahead of the game. Um, so

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Speaker 1: it's it's I think they probably understood a lot of

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Speaker 1: people understood that last year, the last couple of years

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Speaker 1: have been great times to sell. People got very scared

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Speaker 1: after the Great Recession, and as soon as their companies recovered,

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Speaker 1: it was like, I'm putting selling on my agenda. It's

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Speaker 1: something I'm going to think about every year, whether I

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Speaker 1: do it or not. But I want to do it

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Speaker 1: or not. Um, there is so much money out there

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Speaker 1: taste chasing people that I think people took advantage of that.

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Speaker 1: So I think they're probably just I don't have the statistics,

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Speaker 1: but they're just simply less companies for sale right now.

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Speaker 1: Family businesses and succession planning when you don't have the

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Speaker 1: next generation waiting in the wings. Walk us to a

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Speaker 1: little bit of that process. How you can get someone

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Speaker 1: to see that if no one in the family is

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Speaker 1: going to take over the business, you've got to start planning. Now, Okay,

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Speaker 1: so first of all, it's a This has always been

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Speaker 1: a little bit of a mystery because most privately held

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Speaker 1: companies are not family business. They're usually started by an entrepreneur.

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Speaker 1: They don't tend to give the company to their son

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Speaker 1: or daughter because they recognize the fact that they don't

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Speaker 1: necessarily have the tools to be an effective president. So

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Speaker 1: it's rare that we will sell a company that is

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Speaker 1: second or their generation because either they don't make it

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Speaker 1: or that transition never happened. Okay, So maybe they want

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Speaker 1: to liquefy their position in some way. They're thinking of retiring,

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Speaker 1: and they want to take some money out of the business,

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Speaker 1: right right, I'm sorry, that's right. So well, just in

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Speaker 1: a couple of seconds, are you seeing more activity in

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Speaker 1: that level? That's always been That's always been the market.

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Speaker 1: It's always been the market. People who have started businesses

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Speaker 1: that want to sell and generally have not transitions to

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Speaker 1: the second with their generation. Patriots Mitchell, thank you so

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Speaker 1: much for joining us and giving us uh I into

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Speaker 1: your world. Fascinating you appreciate it. She's co founder and

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Speaker 1: managing director Sperry Mitchell and a company she's joining us

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Speaker 1: here at the Bloomberg Breakaway Summit. I'm Kathleen Hayes along

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Speaker 1: with Pim Fox, and this is taking Stock on Bloomberg

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